It is a comfortable feeling to know that you stand on your own ground. Land is about the only thing that can’t fly away.
~ Anthony Trollope
If you want to know how to find out who owns a specific property in your city or community the process is relatively easy. At least it is in my province up here in Canada.
I’m going to assume that the process is probably similar for other jurisdictions in North America.
To ensure that we honour property rights there needs to be a way of determining and keeping track of the buying and selling of land and other property. Otherwise there would be chaos and squatters would have all the rights.
Because of this, our records related to land rights and property titles in North America is fairly robust and stringent. This is good news as every piece of property or land is identified usually with a legal description of the land as well as a Land Identification Number Code and/or title number.
It can sometimes be difficult depending on which county, province or state you’re in to search for the legal registered owner of a property based on the street address. Most often you’ll need to know the Land Identification Number Code (LINC) or legal description.
If you need the legal description or LINC or title number asking your state authorities about how to go about getting that will be helpful.
Where I am based, land titles and property ownership is controlled at the provincial or state level. As such, there is a state department (actually provincial department) called Service Alberta and under them is the Land Titles division. Service Alberta takes care of things like Vital Statistics, Registries, Charities, Businesses, Motor Vehicles etc, so that is likely where you want to start looking if you need to find out the ownership information for a particular property.
So to find out who is the legal owner of a property you are interested in you need to fill out a title search form or something similar and pay a fee to your state or province. This fee will be anywhere from around $50 or less to perhaps $100.
For this fee you will receive a certificate of title or some other such legal form which will include the registered owner of the property as well as the legal description of the land and any instruments registered against the land. I.e. debt or liens etc.
Now having said that, this is an overview of how it works in my province for obtaining the name of the registered owner of a property.
I am pretty sure it will be similar in your state or province though the actual mechanisms, fees and infromation obtained might differ somewhat.
But why would you want to know who owns a specific piece of property? Well, I can think of 2 reasons off the top of my head and there are likely more.
Firstly, if you are interested in buying a property but it isn’t up for sale this can be a great way to approach the owner. Also, if your land title document gives you the instruments listed against the land, that can offer a good bargaining position if you know how much debt is owed on the mortgage for instance.
The second reason you might need to know the legal owner of a property is if you have won a judgement against them and need to affix a lien against their property in the hopes of collecting your settlement one day when the property is sold.
Now I like real estate as an investment but it is labour intensive. What do I mean when I say that?
Well, if you own a property and you’re renting it out which is perhaps the simplest way of making money with real estate then you become a landlord.
Under ideal circumstances you have terrific tenants and you can help encourage that by buying homes or apartments complexes/suites in middle or upper middle class areas. This is not a guarantee and certainly not an aspersion against poorer folks but it is a guideline.
However, even having ideal tenants, you will occasionally have to fix things, repaint between renters and generally maintain that property. If you own your own home you know that can be quite a bit of time and money.
You can either do it yourself or hire a management company. Don’t forget you are also responsible for taxes, registrations etc, etc.
It’s quite a bit of work. Nevertheless, real estate as I write this – early 2012 – is a great value in many areas of the United States. Putting 25% or so down allows you to leverage other folks’ capital to earn some decent returns. But I prefer other ways of investing in real estate.
I prefer Real Estate Investment Trusts, especially those that are more focused on commercial properties. It has been my experience that REITs that invest in shopping malls, business parks and the like suffer fewer fluctuations. REITs offer practically the same opportunities of investing in real estate but with some risk advantages.
You are a landlord amongst hundreds or thousands of others and REITs offer great diversificaiton amongst their assets. You also are rewarded for any increases in the property values but you also risk the same downside with property devaluation. You also enjoy income as REITs are mandated to disburse 90% of their taxable income to their shareholders.
Are REITs less risky than real estate? No, I think the risk is similar but you don’t have the hands on labour and hassles as you would to owning property yourself.
So how do you choose a REIT to invest in? Well, to me it is a combination of choosing a good stock as well as good real estate. So what I look for is managements track record which can be determined by their diversification in the real estate portfolio. Have they purchases real estate wisely? Additionally, profitability and asset appreciation are also good signs of management.
There is one difference which is worth mentioning if you are looking to invest in REITs and that is to NOT use the usual stock metrics like EPS or P/E ratios to value a REIT. For a more thorough investigation into why Funds from Operations (FFO) are better than earnings numbers take a look at this overview. Basically depreciation is a very different animal in real estate than it is in companies and as such needs to be treated differently.
It’s not all that difficult once you get a handle on it. But it is important as with anything that you take your time to understand exactly what it is you’re investing in. You wouldn’t buy a property sight unseen so be sure you understand the REIT that you are investing in if that is your choice.