Basic of Real Estate Investment
The concept behind an investment plan is to ensure regular returns so that the money you possess doesn’t get caught up in inflation. Plus, investment doesn’t just mean stocks, bonds and gold. Real-estate has been a widely sough after option for years now. Although the recent culmination of subprime market has diminished the spirits of investors in real estate sector, it shouldn’t be your excuse to miss such a wonderful investment opportunity. Facing such crisis is a part of any investment option. Before you take a deep plunge into the world of real estate investment, be well informed of certain basic facts of this market.
What is real estate investment?
In a real-estate investment, you use your money to buy properties and generate a steady money flow by selling, leasing, or renting out your property. Real estate properties include constructed homes, villas, apartments, open plot and commercial spaces. As an owner of the property, you possess all the transfer, control and ownership rights. The return in investment also is in the form of property value appreciation. When this comes with an income at regular intervals, real estate seems like an attractive option. However, the only major problem is the requirement for a huge initial capital to begin the business. Whether it is real estate or any other form of investment, initial capital is something that needs to be taken care of.
Most investors venture into this kind of investment to obtain regular rent from their tenants. It’s an attractive option considering it ensures regular income along with appreciation of your property’s value. However, you will be responsible for paying expenses like mortgages, maintenance cost, and taxes. Most real estate investors leap into this field with one intention – renting out the property to a tenant. The only problem in this investment is that sometimes, you might not find tenants for a long time.
You might find this kind of investment similar to investing in mutual funds. An investment firm, after collecting a considerable amount from small investors buys properties on their behalf. The firm takes care of all expenses and rents the property. The profit is then shared among all investors. A fee is charged by the firm. The risk factor is as minimal as the profit. This kind of investment needs no experience.
Otherwise known as property flipping, in this method you as an investor buy a property and sell it after its value appreciates to gain profit. In some cases, the investor buys a property of little value and renovates it to sell it for a higher price. Some prior knowledge and experience is required to succeed in real estate trading.
By Aaron Cook