The idea of derivatives as instruments to gain exposure to property has not yet been fully accepted by real estate industry leaders. Growth in the property derivatives market must be led by an increased understanding and acceptance of reliable indices and instruments on them, as well as a better understanding of their potential benefits. Managers of property portfolios need to see that risk can be dealt with quickly and relatively cheaply, saving transaction time and costs. If a real estate portfolio manager wants to reduce property exposure temporarily, he or she must be aware that derivatives allow this to be done without selling a portfolio that the manager may not be able to get back.

The UK was able to embrace derivatives well before the rest of the world, mainly due to the availability of relevant property indices. The London-based private firm Investment Property Databank (IPD) originally focused on building its UK index. Most other countries failed in the past to define good indices.

IPD now collects information on property market performance across a variety of countries and its indices are considered to be the leading benchmarks. By the end of 2007, IPD UK collected portfolio records capturing 12234 properties with a market value of GB£ 183769 billion. It benchmarks property unit trusts and publicly traded instruments, but also takes direct investment portfolio data sent by pension funds, and benchmarks performance against data sent by peers. It publishes individual country indices for 15 European and 6 non-European countries as well as a pan-European and a global index. Many practitioners hope to see an IPD-led global benchmarking index emerge. This is likely to happen as more and more banks enter the property derivatives market and start trading contracts on the IPD indices. So far, however, the UK is fairly unique in terms of the IPD index, which benchmarks the asset class of property as a whole as well as different property sectors.

Corporate distress situations are characterised by uncertainty and instability. The key contributor to the crisis tends to be a ‘liquidity crunch’, whereby the company experiences severe cash shortages. This constrains the company’s ability to carry on operating normally. An assessment of the company’s short-term liquidity position, and meeting the cash needs identified, is necessary if stability is to be attained, so that the loan workout can be transacted effectively.

In a wise move, like so many people from all walks of life before us, we decided to divest ourselves of all noncore activities, and focus again on what we know best: smart real estate deals where we have identified a twist that we can capitalize on to vastly increase value. Best Choice Properties continues to work with equity partners from all over the world to create value with real estate transactions that are, in general, a lot of fun.

• Companies which dominate their market in certain way. Such dominance, also called ‘economic moat’, may be (for instance) a recognized brand, a wide network or high costs involved in switching to a different service provider. Because of these moats make competitors find it hard to get a foothold and, therefore, it more probable that the company will stay financially successful and stable.
• High return on equity. This is a good measure of how successfully a company makes use of invested money to render growth in earnings. A high ROE may indicate that a company has a moat.
• Consistent and rising dividend payments may indicate that a company is consistently making profit.
• Companies operating outside the US. Warren Buffet and other financial experts are convinced that the increasing US trade deficit will devalue the US dollar in the long term and, therefore it is prudent to have some exposure to companies which operate in markets different than US.

Obviously, such measures are just the tip of the iceberg. If you are seriously considering investing in stock, you have to do some more research on your own.

If you posses special items for which the value goes beyond your policy limits, you are advised want to add a “personal articles floater” to your coverage. Rates will vary depending on the state and the actual item insured, but you should be able to buy a personal articles floater for as little as $30 a year to insure your most valuable belonging for their current purchase price or recently appraised value. Such coverage is frequently used to fully insure engagement rings or electronics. “Floaters” have no deductible and typically cover a wider range of claims, such as theft or loss away from the home.

You might also want to consider the following tips when applying for insurance:
•    Read and understand your policy.
•    Keep a list of personal belongings, prepare photographic records, and put them in a safe-deposit box or other place away from home.
•    Be certain that your coverage keeps pace with improvements or rising value.
•    Review your policy every year.
•    Call your local fire department or other emergency agencies for information on improving the safety of your home.

You will also have to collect financial information the lender will require and apply for pre-approval. Try to read as much as possible about the lending process and what steps will be needed to complete it. Check your credit and deal with any credit problems that may have arisen before the lender gets your credit report.

Finally, take a short list of properties you are interested in and hand it over to your agent. Many experienced buyers and investors prefer to purchase real estate foreclosures without the help of an agent, but if you have never done this before, it is a really good idea to trust the expertise of an agent who has both knowledge and experience in purchasing distressed property.