THE   ABCs  OF  REAL  ESTATE  INVESTMENT

MANILA, December 20, 2004 (STAR) Six days a month, a wide range of people troop to the Asian Institute of Management Conference Center to attend a lecture series on real estate investment. Organized by the Urban Institute of Real Estate, the series is set up in such a way that each topic can stand on its own.

"We talk about the broad aspects of brokering and present in simple terms the different facets of a real estate transaction," said Urban Institute founder Enrico Cruz. "Although the required knowledge is not so difficult to acquire, nothing beats the confidence derived from actual experience when making a real estate investment decision."

Seminar participants range from employees of existing property development companies and real estate marketing companies to brokers and housewives looking for possible areas to earn extra income from.

"By keeping our seminar fee at P1,100 per four-hour session, we are able to get a lot more people to attend. With such training, there is more opportunities available for the not-so-rich to better their lives," said Cruz.

Lessons

Urban Institute was put up in 1994, right after Cruz topped the Real Estate Appraisers Board Examination and 20 years after Cruz put up his construction firm, Enrico Cruz Engineering.

"The key to making money in real estate is not in selling at a profit but rather in buying at a profit. In real estate, the opportunity of buying at less than market value is always present. As an investor, you should not buy at market value because you are not the end-user. You can be likened to that of a distributor who is entitled to a discount based on the selling price, which actually is the profit for distributing the merchandise," said Cruz.

Although real estate investment requires big capital, Urban Institute lecturers have come up several options for smaller players to get into the game. One such option is syndication where a real estate professional links up with passive investors who have the money but do not have the time or knowledge to invest in real estate.

"For new and prospective investors, I do not recommend applying leverage or using debt capital. It is better to initially invest small, putting in bigger sums as you gain experience or acquire the needed knowledge," said Cruz. "In some situations, such as bank-acquired assets, that are now being offered for sale at 8% downpayment, you only need a small capital. Your exposure to the investment is only 8% plus any improvement that is needed and any negative cashflow in the future that would be required to amortize the 92% balance."

Clearly, these Urban Institute seminars are eye-openers to new and prospective investors in real estate. –RGdelaCruz


Reported by: Sol Jose Vanzi

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