Sunday, December 21, 2008

Real estate investment: why you should do it and how you can do it

It is always said that if we do any things rightly it takes a good shape in the future. Same goes for the real estate investment too. It can really prove beneficial if it is rightly done. But there are many risks involved in this business and only an intelligent player can win the race. If you really want to win the real estate race then you should have a clear vision about why you are trying to invest in real estate.

Why you should invest in real estate?

  • Appreciation of Value: With inflation, the value of the real estate properties are appreciated. So, after a considerable period of time, one can easily reap out the advantages from the real estate investment. As soon as the value increase you can sell your property and can earn easy incomes.

  • Yielding Rentals: One can achieve rental yields only when you buy a real estate property and put it on rent. After deducting the taxes and the insurance expenses and dividing that figure with the cost, the real figures of rental yield is evaluated. So, you have an added advantage here in the sense after paying taxes you are gaining from the real estate investments.

  • Positive effects of Inflation: You can get higher rent for your properties when the inflation increases. But, keep in mind that your monthly payments for the mortgage remains the same. That means you earn profit with the increase in income, expenses remaining unchanged.
Prospect of real estate investing is increasing day by day. You can get good returns if you actually know how to invest in real estate.

How to invest in Real Estate?

  • Check your Affordability: Always keep this in mind that real estate investing takes times in procuring returns. That implies that you need money not only for buying the real estate properties but also for maintaining it. You can buy the property with the help of mortgage loan only if you are ready to repay the amount according to the terms and conditions of the mortgage loan. So, it is advisable to check whether you can actually afford such a long term investment.

  • Choose the property type wisely: There are two types of properties. Prime and non-prime type. The prime properties are always the expensive ones but carry chances of high returns. Non-prime properties might be profitable only if the demand is increasing. So, take a wise decision.

  • Keep an eye on latest market trends: Though the real estate investment is always made on the long term basis, you should always keep an eye on the latest market trends. In order to secure substantial returns, you have to choose the right time to invest.

  • Keep in mind about the taxes: Wealth tax comes into the picture only if you become the owner of two residential houses. If you buy a real estate property and put it on rent, you will be liable to pay income tax on your rental income. So, it is better to think about the taxes before you take any firm decision.
If you really liked the inputs on " real estate investment ", then don't forget to put your valuable feedback. All the comments will be accepted with honor.

No comments: