Monaco: Makes Top 20 Hot Markets for Real Estate Investors

Monaco – Market Analysis:


It’s not just the beach and marina that makes Monaco special. A large part of its appeal is the income-tax-free-zone status all of which helped make Monaco a Top 20 Hot Market for Real Estate Investors.

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Best Places for Vacation Home Deals

Best places for vacation home deals – Whether you love golf, the water, the outdoors or theme parks, here are the … ow.ly/2K7zw3

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Loan-To-Value Ratio

Loan-To-Value Ratio is a lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. Typically, assessments with high LTV ratios are generally seen as higher risk and, therefore, if the mortgage is accepted, the loan will generally cost the borrower more to borrow or he or she will need to purchase mortgage insurance.

Calculated as: Mortgage amount divided by the Appraised Value

For example, Jim needs to borrow $92,500 to purchase a $100,000 property. The LTV ratio yields a value of about 92.5%. Since bankers usually require a ratio at a maximum of 75% for a mortgage to be approved, it may prove difficult for Jim to get a mortgage.

Similar to other lending risk assessment ratios, the LTV ratio is not comprehensive enough to be used as the only criteria in assessing mortgages.

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What is the Cap Rate?

Definition of Capitalization Rate
 A rate of return on a real estate investment property based on the expected income that the property will generate. Capitalization rate is used to estimate the investor’s potential return on his or her investment. This is done by dividing the income the property will generate (after fixed costs and variable costs) by the total value of the property. If you want to get technical, it is basically the discount rate of a perpetuity.
 
 Capitalization Rate = Yearly Income/Total Value
 
 Also known as “cap rate”.
 
 
 Capitalization Rate Explained
 
 Capitalization rate is a good jumping-off point to quickly compare many investment opportunities, but it should not be the sole factor in any real estate investment decision. Many more factors need to be looked at such as the growth or decline of the potential income, the increase in value of the property, and any alternative investments available.
 
 For example, if Stephane buys a property that will generate $125,000 per year and he pays $900,000 for it, the cap rate is: 125,000/900,000 = 13.89%.
 
 But it gets a little more complicated. What if the property’s value rises to $2 million two years later? Now the cap rate is a less favorable 125,000/2 million = 6.25%. This is because Stephane could potentially sell the property for $2 million and use that money for an alternative investment.
 
 
 

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Comparative Market Analysis (CMA)

Comparative Market Analysis (CMA)
 An evaluation of similar, recently sold homes (called comparables) that are near a home intended to be bought or sold. It establishes a price estimate based on current market activity that can be used as a guide for pricing a home. Buyers, sellers, and real estate agents perform a CMA when they are preparing to buy or sell a home.
 
 
 
 

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Carlisle Mitchell – PITI

PITI is an acronym that stands for principle, interest, tax, and insurance (PITI), which are the four primary parts of a monthly mortgage payment.
 
 
 
 

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Carlisle Mitchell – Amortization Schedule

Definition of ‘Amortization Schedule’
 
 A complete schedule of periodic blended loan payments, showing the amount of principal and the amount of interest that comprise each payment so that the loan will be paid off at the end of its term. Early in the schedule, the majority of each periodic payment is interest. Later in the schedule, the majority of each periodic payment is put toward the principal.
 
 If you know the term of a loan and the total periodic payment, an easy way to calculate an amortization schedule is to do the following: Starting in month one, multiply the loan balance by the periodic interest rate. This will be the interest amount of the first month’s payment. Subtract that amount from the total payment, which will give you the principal amount.
 
 To calculate the next months’ interest and principal payments, subtract the principal payment made in month one from the loan balance, and then repeat the steps from above.

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