Outsourcing And Domestic Demand: The Case For Real Estate Capital Growth
It is an undisputed fact that market economies, in Capitalism, are moved by the supply and demand for goods and services. Specifically as it relates to the Real Estate sector, the basis for the real estate market is the demand by households, businesses, governments and institutions for space and shelter to conduct activities. And moreover, since according to the National Association of Realtors the aggregate size of residential real estate markets in the United States measured by sales volume accounted for almost USD 57 billions in 2005 alone, the impact of households’ demand for residential real estate products is huge.
When people acquire income they tend to invest it, and the more people that acquire income the more people that tend to invest it. Therefore, there is a correlation between capital and employment in real estate or, if you will, between income and labour. An increase in levels of consumption sets forth an increase in prices caused by a corresponding increase in demand, in itself generated by a commensurate increase in the income-employment factor.
It follows, therefore, that growth is derived by the equilibrium of capital and investment with labour and employment. And since, furthermore, production is in direct function of consumers spending which increases as unemployment falls, it follows that capital accumulation increases as employment rises and capital accumulation decreases as employment falls. Which fact, therefore, brings up to light the importance of the conditions of domestic job markets for real estate. All the more so at a time when – due to an ever more efficient process of economic globalization – we are witnessing a constant migration of jobs from North America to emerging economies abroad.
Globalization and outsourcing were, in fact, the focus of the annual symposium held by the Federal Reserve Bank in Kansas City. The topic being floored and examined by the top minds of the economic world was how the rise of China, India and other countries is reshaping employment and wages within the North American economy.
It is commonly believed that wages of workers in rich countries are being depressed by the shift of jobs to low-wage countries, but the debate undertaken at the symposium has offered a much rosier view, with economists arguing that off-shoring can actually increase the wages of domestic workers. The general feeling was that outsourcing boosts firms’ productivity and profits, thereby enabling them to expand and, consequently, to take on more workers at home to perform jobs that cannot be easily moved abroad. In essence a line is being drawn between low-paying, unskilled jobs that can be transferred to emerging economies like those of China, India and, to a lesser extent, Russia vis- Tags: Aggregate Size, Capital Accumulation, Residential Real Estate
Refinancing Commercial Property
The refinancing of commercial property often occurs for the same reason a person might refinance their home – to reduce high interest rates. The owner may also be looking into refinancing in order to obtain cash from the equity that has been built into the property over time. Regardless of the reason there are few points to remember if you are thinking of refinancing your commercial property.
1.Any capital obtained from the refinancing of the property should be reinvested in the property itself. Any other use of the cash and the interest paid on the new portion will not be tax deductible. This cash-out amount will be considered a consumer debt if its use was found to be outside of the property and is therefore no longer tax deductible.
2.Because loans for commercial properties are typically much larger than those for residential properties, it will pay to consider the type of loan you have in depth before committing to a large loan that will take many years to repay. Compare your options for both fixed rate and variable rate loans. Does the variable rate loan have a cap? How many times is it expected to change? These details can often be inferred from the investment index that is linked to the rate. Be wary of any lender unwilling to discuss these details with you.
3.If you decide to refinance, check to see if the new loan has a “due on sale” clause. This clause works to the benefit of the lender in that it prevents the property from being sold without the approval of the lender.
4.Make sure you know what kind of paperwork will be involved. Professionally prepared stated income reports may be all you need for many types of commercial property, depending on the circumstances. Corporate tax returns, profit and loss statements, and balance sheets may not be required. In rare situations, full appraisals or environmental reports may be needed. The more complex the situation surrounding the refinancing, the more complex the required documentation may be.
5.Hefty penalties that must be paid off for pre-payment of an existing fixed-rate loan may prohibit some borrowers from refinancing. Check the details of your original loan to see if there are any pre-payment penalties.
6.Interest rates on commercial real estate loans have reached as low as 5 percent for a 10-year term. Make sure you get the best rate you can if you decide to refinance. It may be best to lock in long-term debt now – interest rates may or may not get any lower.
7.Consider selling if it is an option for you. Prime commercial real estate is a hot investment in many areas today. Test the market and see what kind of offers come back.
8.If your business is doing the refinancing of the building it occupies, acquiring a term loan may be an option. Term loans usually mature between one and ten years and can give small businesses the operating cash they need.
By: J Suffie
About the Author:
Buying a home? Refinancing your mortgage? Need some spare cash to renovate your home? There are lots of reasons why you may need to talk to a mortgage broker about a mortgage. The biggest mistake you can make before you do is not doing proper research first.
Research can make you aware of current trends in the market and open your eyes to some of the unscrupulous tactics used by some greedy mortgage brokers. For all the information you need on mortgage refinancing visit our site at: http://www.refinancingright.com
Options Trading – An Introduction For Beginners
Imagine somebody owns a piece of property which you really like, but do not have enough spare cash to purchase at short notice. There are various means available to you to raise the money, but they all need time to accomplish. So what can you do to prevent the owner from selling the property to another interested party?
Well, you can get him to offer you an option.
An option is a contract which conveys to its holder the right, but not the obligation, to buy the subject of interest stipulated in the contract.
So basically if the owner offers you an option, he is agreeing to let you hold the exclusive rights to purchase his property for a fixed price for a fixed amount of time. So if you manage to raise the necessary money within the stipulated duration, you would be able to purchase the property at the agreed price by exercising your option.
The owner of course does not offer the option for free. You will have to pay him a fee to secure the option. After all, you are preventing him from selling to other interested buyers for some time and he does bear some opportunity cost. The option fee is determined by factors such as the effective duration of the contract and exercise price.
If you choose not to exercise your option due to whatever reason, you will forfeit the option fee when the option expires.
In the context of the stock market, an option is a contract which conveys to its holder the right, but not the obligation, to buy or sell shares of the underlying security at a specified price on or before a given date. After this given date, the option expires and ceases to exist.
A call option is an option contract that gives the owner the right to buy the underlying security at a specified price for a certain, fixed period of time (until its expiration). For the writer of a call option, the contract represents an obligation to sell the underlying stock if the option is assigned.
A put option is an option contract that gives the owner the right to sell the underlying stock at a specified price (its strike price) for a certain, fixed period of time (until its expiration). For the writer of a put option, the contract represents an obligation to buy the underlying stock from the option owner if the option is assigned.
An option contract usually represents 100 shares of the underlying stock.
Strike Prices (or exercise prices) are the stated price per share for which the underlying security may be purchased or sold by the option holder upon exercise of the option contract.
Generally, at any given time a particular option can be bought with one of four expiration dates besides LEAPS ((Long-term Equity Anticipation Securities also known as long-dated options). Basically, LEAPS means calls and puts with expiration as long as thirty-nine months.
It is important to know that option holders do not enjoy the rights due stockholders – such as voting rights, regular cash or special dividends. This is because option holders own the option and not the actual shares of the company. A call holder must exercise the option and take ownership of the underlying shares to be eligible for these rights.
In conclusion, an option is a contract to secure the rights to purchase something for a stipulated amount within a stipulated timeframe. Options trading is an investment instrument that confers an option holder the right to buy or sell shares from the options seller at a stipulated amount within a stipulated timeframe. For many, options trading is a good leveraging instrument to make money off stocks they cannot afford. For others, options are a good way to protect their investments.
By: Richard T. Tyler
About the Author:
If you found this article useful, you can get more great stock trading tips and tons of free investment advice at Invest Money Stocks.
This article was written by Richard Tyler – a happily retired investment guru who ran several successful businesses during his earlier years. He now shares his wealth of knowledge on investment, business and strategic wealth management at Invest Money Stocks. Ignorance is often the reason why some people are unable to harness upon what they already have to make more money while some ‘in-the-know’ get richer every year simply through investments. Richard sees it as a passion as well as a pleasure to share his knowledge and experience and hopes that his website will be a wealth of knowledge for those who need help in investment and wealth management matters. Invest Money Stocks covers a wide range of topics from business management, home budgeting, personal wealth management to stocks investment, options trading, penny stocks trading, forex trading, bonds, technical analysis, fundamental analysis and more.