Real Estate
Pruksa – committed to constant growth
PRUKSA REAL ESTATE PLC’S president & chief executive officer Thongma Vijitpongpun. “To achieve our revenue target of Bt100 billion in 2017, we have to be a multinational firm,” Thongma Vijitpongpun, president and chief executive officer of Pruksa Real Estate, the market leader among listed property firms with pre-sales of Bt20 billion in the first half of this year, said in an interview with The Nation’s Somluck Srimalee last week. He shared his ideas on how he is managing his business in order to achieve this goal. How do you intend to become a multinational firm? We have set up a team to study how to expand our business overseas. Vietnam, the Maldives, and India are the locations of our pilot projects, which will start to generate income this year. However, they will generate less than Bt500 million, compared with our pre-sales target of Bt29 billion this year. We also are studying home-buyers’ behaviour and demand in Indonesia and Oman. Indonesia has the potential to be the next country for our business expansion, because it has a growing population and the purchasing power to buy residences. Meanwhile, Oman’s potential depends on research. This project was initiated at the suggestion of an Omani businessman we invited for a visit in the first half of this year. In China, we also have strong interest to expand our investment, but under China’s rules, when you develop a residential project, you have to use local constructors. As a result, if we expand our investment in China, we may only be involved in management and sales projects. Why did you set the business goal of being a multinational firm? That was not our business plan when we started in 1993. At that time, we thought that if we could drive our sales to nearly Bt1 billion, we would be a success. Then we faced the financial crisis of 1997, and the question became one of how to survive. After that, we set yearly business targets until two years ago, when we asked ourselves how to drive our business with sustainable growth averaging 25 per cent a year in a way that would not be disrupted by cyclical problems like economic crises, political problems, etc. To manage our business to achieve that goal, our team decided that we have to manage our business risk by expanding our business both here and overseas. This will balance our business risk. This follows our business expansion from the lower-income market 10 years ago, to the middle and upper income markets. Currently, our customers cover all segments. That’s why the company was not badly hurt by the political problems in the second quarter of this year, and was able to achieve pre-sales of Bt20 billion in the first half of this year, which exceeded estimates. Following this model, if we want to maintain business growth of 25 per cent every year from now till 2017 that means we have to expand overseas. The company also has to balance its income by targeting 60 per cent from the domestic market and 40 per cent from overseas by 2017. Why have you set your business growth target at 25 per cent? In my experience, most businesses have a life cycle: from starting, to high growth, to stable growth, to decline. With Pruksa Real Estate seeing strong growth, if we do not do anything, we will decline. If we don’t want to be like that, we have to change our business strategy from year-to-year business plans to setting a goal of sustainable growth averaging 25 per cent a year. This goal is a challenge for us. If we want to achieve it, we will have to change ourselves. All related parties, such as shareholders, staff and customers, will benefit in the long term. As management, we are committed to creating wealth for all parties, not just for ourselves. [Pruksa recorded pre-sales of Bt20 billion in the first half of this year and plans to launch 50 to 60 new residential projects this year.] How are you preparing your business structure to support your business growth plan? We review our business structure all time. We have decentralised our management from the president and CEO to six senior executive vice presidents. Three of the six are authorised to manage multi-residential brands, and the other three manage back-office affairs, including construction systems, prefabrication manufacturing, accounting, information technology, etc. Meanwhile, all of our multi-residential brands have business units to take care of the brand. The company now has 15 business units authorised to manage business units by themselves. This business model is easy to manage and supports our expansion. Our overseas organisational structure will be flexible and depend on the rules in each particular country. We have set up training systems and promote our staff to focus on their natural abilities. What risks do you face and how do you manage them? In the more than 15 years since I founded this business, I have faced at least two economic crises, and multiple political changes. These have been the major risk factors, but we have survived and recorded strong growth every year by learning how to manage risks on an event-by-event basis. For example, in 1997 we faced the financial crisis. Our business strategy focused on how to survive the crisis. We didn’t suffer foreign-exchange losses, and we were focused on the lower-income market, which was less affected by that crisis than other sectors. Then Thailand faced the global recession in 2008, which didn’t affect us too badly because our customers now cover all market segments. The key to managing our business risk is managing cash flow and monitoring the market at all times. When we know who our customers are, we can manage our business in line with customer demand. For example, in 1997, we focused on townhouses. In 2001, we entered the market for single detached houses. In 2002, we developed prefabrication systems to speed up construction of residences, reducing management costs and speeding up cash flow by allowing us to transfer ownership to our customers within 120 days. In 2009, we started to expand our business overseas to balance our portfolio. Expanding our investment overseas also limits our investment, because we must have sufficient capital in case our expansion results in a loss. That is not always a successful formula, but it depends on the environment. Do you have any plans to move into other property sectors such as hotels, offices, or retail? For the time being, we remain focused on residential projects, in which we have long experience. Who are your main competitors, now that you are the market leader? We are our own main competitors. We don’t think of competitors as being out there in the marketplace. Strive constantly to improve: That’s my motto. It has been since the day I got into this business.
PRUKSA REAL ESTATE PLC’S president & chief executive officer Thongma Vijitpongpun. “To achieve our revenue target of Bt100 billion in 2017, we have to be a multinational firm,” Thongma Vijitpongpun, president and chief executive officer of Pruksa Real Estate, the market leader among listed property firms with pre-sales of Bt20 billion in the first half of this year, said in an interview with The Nation’s Somluck Srimalee last week. He shared his ideas on how he is managing his business in order to achieve this goal. How do you intend to become a multinational firm? We have set up a team to study how to expand our business overseas. Vietnam, the Maldives, and India are the locations of our pilot projects, which will start to generate income this year. However, they will generate less than Bt500 million, compared with our pre-sales target of Bt29 billion this year. We also are studying home-buyers’ behaviour and demand in Indonesia and Oman. Indonesia has the potential to be the next country for our business expansion, because it has a growing population and the purchasing power to buy residences. Meanwhile, Oman’s potential depends on research. This project was initiated at the suggestion of an Omani businessman we invited for a visit in the first half of this year. In China, we also have strong interest to expand our investment, but under China’s rules, when you develop a residential project, you have to use local constructors. As a result, if we expand our investment in China, we may only be involved in management and sales projects. Why did you set the business goal of being a multinational firm? That was not our business plan when we started in 1993. At that time, we thought that if we could drive our sales to nearly Bt1 billion, we would be a success. Then we faced the financial crisis of 1997, and the question became one of how to survive. After that, we set yearly business targets until two years ago, when we asked ourselves how to drive our business with sustainable growth averaging 25 per cent a year in a way that would not be disrupted by cyclical problems like economic crises, political problems, etc. To manage our business to achieve that goal, our team decided that we have to manage our business risk by expanding our business both here and overseas. This will balance our business risk. This follows our business expansion from the lower-income market 10 years ago, to the middle and upper income markets. Currently, our customers cover all segments. That’s why the company was not badly hurt by the political problems in the second quarter of this year, and was able to achieve pre-sales of Bt20 billion in the first half of this year, which exceeded estimates. Following this model, if we want to maintain business growth of 25 per cent every year from now till 2017 that means we have to expand overseas. The company also has to balance its income by targeting 60 per cent from the domestic market and 40 per cent from overseas by 2017. Why have you set your business growth target at 25 per cent? In my experience, most businesses have a life cycle: from starting, to high growth, to stable growth, to decline. With Pruksa Real Estate seeing strong growth, if we do not do anything, we will decline. If we don’t want to be like that, we have to change our business strategy from year-to-year business plans to setting a goal of sustainable growth averaging 25 per cent a year. This goal is a challenge for us. If we want to achieve it, we will have to change ourselves. All related parties, such as shareholders, staff and customers, will benefit in the long term. As management, we are committed to creating wealth for all parties, not just for ourselves. [Pruksa recorded pre-sales of Bt20 billion in the first half of this year and plans to launch 50 to 60 new residential projects this year.] How are you preparing your business structure to support your business growth plan? We review our business structure all time. We have decentralised our management from the president and CEO to six senior executive vice presidents. Three of the six are authorised to manage multi-residential brands, and the other three manage back-office affairs, including construction systems, prefabrication manufacturing, accounting, information technology, etc. Meanwhile, all of our multi-residential brands have business units to take care of the brand. The company now has 15 business units authorised to manage business units by themselves. This business model is easy to manage and supports our expansion. Our overseas organisational structure will be flexible and depend on the rules in each particular country. We have set up training systems and promote our staff to focus on their natural abilities. What risks do you face and how do you manage them? In the more than 15 years since I founded this business, I have faced at least two economic crises, and multiple political changes. These have been the major risk factors, but we have survived and recorded strong growth every year by learning how to manage risks on an event-by-event basis. For example, in 1997 we faced the financial crisis. Our business strategy focused on how to survive the crisis. We didn’t suffer foreign-exchange losses, and we were focused on the lower-income market, which was less affected by that crisis than other sectors. Then Thailand faced the global recession in 2008, which didn’t affect us too badly because our customers now cover all market segments. The key to managing our business risk is managing cash flow and monitoring the market at all times. When we know who our customers are, we can manage our business in line with customer demand. For example, in 1997, we focused on townhouses. In 2001, we entered the market for single detached houses. In 2002, we developed prefabrication systems to speed up construction of residences, reducing management costs and speeding up cash flow by allowing us to transfer ownership to our customers within 120 days. In 2009, we started to expand our business overseas to balance our portfolio. Expanding our investment overseas also limits our investment, because we must have sufficient capital in case our expansion results in a loss. That is not always a successful formula, but it depends on the environment. Do you have any plans to move into other property sectors such as hotels, offices, or retail? For the time being, we remain focused on residential projects, in which we have long experience. Who are your main competitors, now that you are the market leader? We are our own main competitors. We don’t think of competitors as being out there in the marketplace. Strive constantly to improve: That’s my motto. It has been since the day I got into this business. .
See the article here:
Pruksa – committed to constant growth
Property market in Thailand remained in a strong position thanks to good sales in the first quarter which were not only driven by the incentives. The stock market is risky to invest in, while buying gold for investment has limitations.
The recovering economy is re-building consumer confidence while homebuyers’ purchasing power is also strong, he said. Development of the mass transit network in Bangkok was another boost for the market. Politics has had little impact on condominium sales but it has dampened investment and the industrial, commercial and tourism sectors.
The reason is partly improved infrastructure, with the Skytrain and soon to be opened Mass Transit Subway system making the business districts more easily accessible from the outskirts of Bangkok. Northern districts such as Ram Intra, Rangsit, Nonthaburi, and Chang Wattana are the hotspots of housing estate development, while the downtown areas surrounding Silom, Sathorn, and Sukhumvit Roads remain the most active areas for new condominiums.
Rental houses can be more difficult to find. Unlike highrise buildings, they’re rarely situated on main roads. More often than not, the developments are a few miles out of the central area. Depending on location, four-bedroom houses mostly rent for between $1,350 and $2,930 monthly.
Real Estate
Miami – A Great Place to Buy Real Estate
Miami has evolved into a cosmopolitan wonder city under the sun. Famous for its great beaches, this city has also earned a reputation of being a sexy, marvelous and trendy place to live. From amazing golf courses like the one at Crandon Park in Key Biscayne to the Miami Metro Zoo, this beautiful city has something to offer to everyone. Owning a piece of paradise is a dream within reach of locals and foreigners as well. People from all parts of the world have already taken advantage of the great opportunities available today in the marketplace.
Miami has some of the most amazing real estate developments like the astonishing Santa Maria located in Brickell, or the unbelievable towers of Icon Brickell. Some other exclusive and impressive Miami condos include, the Jade at Brickell, the 900 Biscayne in downtown Miami, the fabulous Trump Palace in Sunny Isles Beach and the astonishing Icon South Beach just to name a few. These modern Miami luxury condos have all the comforts and amenities only found in five star hotels.
The city of Miami has it all, great golf, amazing beaches, a turquoise beautiful ocean, a warm weather, excellent shopping, an electrifying night life, lots concerts, entertainment and sports events at the famous America Airlines Arena in downtown Miami.
Miami real estate buyers are as diverse as the city culture and population itself. Buyers come from all over the globe, Europeans, Latin Americans, and Asians and of course buyers from all around the United States. Some have chosen this beautiful city to have a second home and some have fallen in love so much that they now call Miami their home making it an exciting melting pot to live in.
Real Estate
Real Estate Investor's Secret Weapon
Real Estate Investors have a unique tool in their arsenal that other types of investors do not. One of the oldest tax code sections is 1031. This secret weapon is called a 1031 exchange. It is one of the few areas of the tax code where the US Government allows taxpayers to sell an asset and not immediately pay the taxes. Even State taxes are deferred. The way a 1031 Exchange works is simple. If you sell piece (s) of investment property, and you are want to buy of another piece (s) of investment real estate of equal value, you can defer indefinitely all taxes (capital gains (15%), recapture tax (25% ) and state income tax). This is the benefit: by not having to pay those taxes, you can keep your money (instead of giving it to Uncle Sam) and smartly reinvest it for yourself to grow your real estate portfolio. 1031 is a free financial tool that let you keep 15-30% of taxes you would have had to pay. In the world of increasing taxes, 1031 is a viable alternative.
There are some guidelines that need to be followed, and I will break them down. First, what is investment real estate? Investment real estate is defined as property used in a trade or business. It could be used to run your office or it could be rental property. One of the nice flexible features of 1031 is that all real estate is exchangeable. This means that a home can be exchanged for a condo or a piece of land can be exchanged for a commercial property. I use the rule of thumb that any property with a deed can be exchanged for another property with a deed. The other nice feature is that you can sell one property and purchase more than one replacement property or vice versa.
There are three main rules that investors need to know about 1031 exchanges. First of all, you must use a Qualified Intermediary (an Independent Middleman) to help facilitate your 1031 exchange. The QI, as they are called will do many things including prepare the Exchange Agreement, Escrow your 1031 proceeds, and most importantly make the exchange go smoothly. The QI must be hired prior to the closing of the relinquished property. Secondly, the Exchangor (the person doing the exchange) has 45 days from the closing date of the relinquished property to identify the replacement property. Identification means to list (not go under contract) up to 3 properties of any value and send them to the QI. Finally, the Exchangor has 180 days (from the date closing on the relinquished property), to close on one of those three identified replacement properties.
I don't want to over simplify 1031. Please consult your tax advisor in addition to your Qualified Intermediary to analyze your exchange and to be sure you are making the best tax decision. I do believe the rule of thumb should be if you want to keep your money invested in real estate, then 1031 is a tool you must consider.
1031 can be a potent weapon for the smart real estate investor. There is nothing worse than having a client not consider 1031 or not have their real estate professional tell them about it and the relinquished real estate closes and the client changes their mind. After the relinquished property closes, it is too late to do an exchange. 1031 is an efficient tool for an investor to build their portfolio. Plan your transactions and watch your real estate fortune grow.
Dave Owens, CPA, CES is the managing Member of Entrust 1031 Exchange. Dave and his staff have successfully performed over 10,000 exchanges since 1997. Entrust has an arsenal of tax free strategies. Feel free to contact Dave for more information or questions at 239-333-1031 or owens66@entrustfreedom.com .
Source by Dave Owens
Real Estate
How to Become a Successful Real Estate Developer
Real estate investment and development has never been a more popular pastime or career changing challenge; if you would like to learn seven secrets for consistently successful real estate investing through development or you would like to know how you can continue to profit from property even if the market takes a downward turn just read on …
1) Do Your Location Homework – did you know that through successful and sustained location research professional property investors actually continue to profit during a market down turn? It's true – whatever the market conditions you can apply their location research approach to your real estate investments and also make consistent profits from property.
Take the necessary time to learn all about a town or city you're considering for your next property development purchase and discover where the up and coming areas of that town are likely to be. If there are inner-city redevelopment projects planned examine the real estate market in the immediate vicinity, if there are areas that are booming right now examine the immediate neighboring areas for their potential for future prices arises for example.
Do not follow the crowd – have the confidence to buck the trend and get ahead of the curve by positioning yourself in a market that is about to boom rather than one in that has already blossomed.
2) Know What You Can Afford – While it can pay to sometimes speculate never be tempted to jeopardize your own home. Work out your finances and be ruthlessly strict about what you can and can not afford as a down payment, for mortgage costs and for the renovation and redevelopment of your next real estate investment. Only proceed within the confines of your tightly allocated budget and do not be tempted to over extend yourself specifically if competition in the property market is tough and the market is slow or stagnant.
3) Identify Your Target Market – Having identified your next location for property investment identify the types of people who buy into renovated assets in that location. Know who your target market are going to be and what they are likely to look for in a property in that location. If for example you're examining inner-city spaces you might identify that your buyers will be young single professionals and that the ideal property type for these people will be luxury low maintenance apartments – seek out suitable properties with the potential for redevelopment into luxury low maintenance apartments and you will fulfill your target market's brief … seek out large homes with substantive gardens in the area and you will have totally missed the market and potentially created a property that will not sell!
4) Renovation Not Rebuild – Know your budget limits and your personal skill restrictions. Do not consider taking on a property that is in need of a complete structural overhaul when your budget is tight or you do not personally have the time, skills or inclining to do the structural work yourself. Be realistic about what you and your budget can achieve and seek properties that fulfil that brief. Pay to have an independent and complete survey done on any property you are seriously considering buying before making a down payment to ensure that there are no hidden surprises waiting for you benefit the floorboards to eat up your budget in its entity.
5) Manage Your Budget – With your survey in hand you can approach builders for statements and seek out prices for fixtures, fittings, finishes and furnishings. Take the prices quoted and sourced and build your budget. Factor in overwriting mortgage and service costs and labor costs as well as your findings and structure and allocate your money accordingly. Watch every single spend and be ruthlessly strict with yourself and your builder. If at all possible have your builder commit to a contract with fixed finish dates and fees and stay on top of every single penny or cent every single day. At the end of each week tally up your outgoings and expenditure and ensure you're not exceeding your budget. If you're overspending rein it in or you will have to shave it off other areas of the development. Remember never to scrimp and save on finishing touches and always give yourself a realistic fall back fund in case of emergencies.
6) Appeal To The Widest Market – Forget putting your personal stamp on any property you develop – you are not going to be living in the property! You should already have identified your target market which will give you a good idea of the level and quality of finish expected, now meet those expectations without adding your own personal taste into the equation. By appealing to the widest market or the lowest common denominator your property will be attractive to the majority of buyers making it faster and easier to sell on and profit from.
7) Make Friends With A Real Estate Agent – Your greatest ally when developing property will be your real estate agent. Make friends with these guys and you will build a beautiful and successful symbiotic relationship in which you both profit to the maximum! Real estate agents are a fountain of untapped knowledge about the local market, who is looking for what property in which area, which additional features cost little to add but which push up the asking price and what a buyer expects from your particular property type. Get the facts from your real estate agent and then apply their advice. You will create a property they can market for top dollar and to the widest market – you will make more profit and they will make a larger commission including a beautiful and lasting friendship!
Finally, remember that when you've bought, renovated and sold on you'll be looking for that next property opportunity and any real estate agent who you've worked with well will be on the hunt for suitable real estate for your next investment making any identical purchases that much easier to source.
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