Investing Into The Real Estate Market
Many people invest in the residential and commercial real estate markets to make a fortune!
“Investments” are the process of using funds or capital to make a profitable return.
Returns can be in the form of interest earned, income, and appreciated value.
When dealing with real estate investments of real property,
the most common forms of return are rental income and appreciated value.
For example, buying a house and then renting out the house for a monthly sum will produce a monthly income for you.
The sum has to be greater than your expenses (mortgage, insurance, real estate taxes, etc) in order to produce a profit.
At the same time, you will be putting money in your pocket while reducing the loan principal amount on your property.
Another form of a return would be equity,
which is the increase in value from when you acquired the home to the time you sell it.
When you sell your property the profit you make is called the “capital gain”.
In some states for example, the appreciated value is non-taxable if you have lived in the residential property for more than two years.
Time alone will usually earn you a profit on your residential real estate investment.
Rarely, in extreme circumstances, does a home ever go down in value.
It is only reasonable that, as the population increases, the demand for real estate will also increase.
The old adage “Buy land, they are not making any more of it,” will almost always apply to home buying as an investment.
What basic elements do you need to invest into the Real Estate Housing Market?
Although Real Estate Properties are typically large investments, the actual amount of money needed
to purchase a home could be much less than you image. There are many creative ways to purchase a home these days including such incentives as 100% financing, no closing costs, etc.
Make sure, though, that you have enough regular income or cash reserve to pay the monthly expenses once you close on the house.
Location, Location, Location
These are the three most important things to consider when buying a home.
When purchasing any type of real estate the location is probably the most important aspect of a property.
For example, the price of a home can be reflected in it’s proximity to such amenities as good schools,
major highways, waterfront, and shopping areas etc.
Your initial investment in a home in a “good area” might be a little higher, but the return on your investment will also be greater.
The higher your credit score, the better the offer you will get from a bank or other financial institution.
The interest rate on your loan, for example, will be much lower if your credit score is good.
There are many lenders out there in today’s market, who will forgive many forms of past credit problems and
still offer you a good deal especially if you agree to an automatic electronic
loan payment deducted directly from your checking account each month.
If time permits, it is always better to get “pre-qualified” for a mortgage loan.
Not only will you be able to act quickly when an opportunity on a home comes along, but you will also know,
in advance, exactly how much you will be able to borrow.
Again, shop around for a financial institution that offers the best terms to fit your needs.