Leverage: With real estate, people and companies will lend you money to invest. How much real estate can you buy with $20,000? Probably between $100,000-$300,000, depending on the lender. So you only really need a small portion of the funds to buy an expensive asset.
High level of control: With real estate you can do things such as write your own terms for the contract, increase the properties value, increase the rent, build, subdivide, negotiate lending terms. Although you have a high level of control with a business, it is a bit more risky. How much can you influence the price of stock? Well, not a lot unless you are within the company.
Capital gains: With real estate you can instantly create wealth and equity by buying the property at a discount. Also the property can appreciate over time. For example,
Growth is 8%. You buy a property for $125,000 with a $12,500 deposit.
First year value: $135,000
Second year value: $145,800
Third year value: $157,464
Tenth year value: $269,865:
$12,500 was turned into a gain of $144,865: over ten years! Just imagine if you had a property in an area of 10% growth!
"Yes, but the value of property can go down too!". True the property market can go down, but if you follow the right investment strategies you wont loose money. It is that true the property market can go down. However if you never sell how will you loose money? You may loose equity at some point but the prices are bound to eventually come up again. Even if the prices are down you are still collecting the rent weekly so there should be no problem.
Cash flow:: The capital gains would be enough of a reason just to invest in real estate. But apart from your keeping your money safe, it can also provide you with a profit. Going back to the previous example,
You have an interest only loan for $112,500. Lets assume the property has a 9% yield and the interest rate is at 5%.
Rent from property per annum:$10,125
________________________________
- Interest payments per annum: $5,625
- property taxes per annum: $1,000
- Insurance per annum: $600
- Repairs: $200
- Property manager: $1,000
Before tax profit: $1,700
Now whether you loose profit or gain profit at this point depends on where you live and the tax laws. For example in New Zealand from this point you could claim depreciation of building and chattels and make more profit after tax. You may also receive a tax break on the interest you pay on your loan. However even if you were taxed on the $1,700 you would still make money.
Insurance:: How much would it cost to insure a business? The premiums would be HUGE! On the other hand, how much does it cost to insure a property, not a lot. Even if natural disaster occurred, with the right insurance plan you wouldn't loose money.
Demand:: Home ownership is decreasing throughout the world, therefore it is more common for people to rent properties today then ever before. This will work in your favor because if demand is increasing for rental properties, prices for rent will go up.
To sum it up using out example:: You have made a deposit of $12,500 to buy you a $125,000 asset which, is becoming more in demand, in ten years can increase to $268,865 giving you equity along with a passive income of $1,700 per year!
This article was written by John Whiteside. The original article can be found here http://www.use-your-equity.com/reales tateinvesting.html . Use-Your-Equity can show you how to create value in your home, then show you how to use the newly created equity to make money. http://www.use-your-equity.com for more information.
Do strangers scare or intimidate you? If you're planning to... Read More
So you're interested in going into business as a property... Read More
Solving problems while maximizing valuesThis story has a few good... Read More
Real estate investors familiar mantra location, location, location are nervously... Read More
This is not an article about tricks for 100% (no... Read More
The home selling and buying process can be confusing, particularly... Read More
Cheap, Bargain, Real Estate; Good Deals, Below Market, Low Priced... Read More
Interior colors are vitally important to selling your home quickly,... Read More
The latest investment property headline is this: Popular and well... Read More
What Real Estate Lenders Look ForLenders control many programs --... Read More
This discussion leans toward answering questions asked most often by... Read More
Besides the emotional upheaval of uprooting from your home, your... Read More
Maybe you're moving to a larger home to accommodate a... Read More
Have you seen this in your classifieds? -"Will pay $$$... Read More
Did you realise that there is a lot you can... Read More
Psssssssssst, Want to know a great way to make FAST... Read More
The phone range and Peter was on the other end... Read More
Alphabet Letters after a person's name seem to bestow some... Read More
Equity is the value of your home minus what you... Read More
Waterfront living is among the most desirable of locations in... Read More
There are five major factors to consider when selling a... Read More
Many real estate agents begin and sometimes sadly end their... Read More
Since you are a business oriented person, you might be... Read More
Luxury homes are lots of fun to inspect. Sure, the... Read More
Shopping for property in Belize is not as simple an... Read More
If you've just bought a house, you may be able... Read More
Properties for sale or to rent on the Costa BlancaAs... Read More
When it comes to home buying, the ideal situation would... Read More
Sometimes when we are very busy professionals and very rich... Read More
Why property, some people ask when looking for an investment.... Read More
Because you need quick action when applying for a real... Read More
There are three investment vehicles which can make you rich.... Read More
The proper action when things are going well is to... Read More
Do you remember when real estate financing meant you saved... Read More
When you are considering purchasing a property; either for investment... Read More
If you are serious about selling your home, you probably... Read More
Real Estate investing can be used to gain wealth in... Read More
Fourteen Top Tips for Overseas Property Investment:1. Buy what you... Read More
Purchasing a home can be a complicated and confusing process,... Read More
What's the difference between death and taxes?Death doesn't change every... Read More
As you continue to read about real estate investing, you... Read More
Real estate investing usually begins with the purchase of a... Read More
Wouldn't it be nice to have Roger Hazard's design team... Read More
Do you want to sell your home right away? Don't... Read More
Are you ready for the lesson that will put you... Read More
With so many estate agencies vying for your business, choosing... Read More
Looking to buy real estate in Utah? The market has... Read More
One of your first steps, when you're getting ready to... Read More
Many people believe that a real estate broker is needed... Read More
If you are thinking of relocating to Maui, this article... Read More
Have you ever noticed that despite the massive number of... Read More
The power of goal setting has been well documented and... Read More
Discover new interior Design Psychology strategies to increase your real... Read More
Have you ever seen those infomercials about buying houses with... Read More
Successful real estate investing depends largely on a correct assessment... Read More
Mexico is CHEAP! But its getting more expensive. As property... Read More
When looking for a home, it is important to first... Read More
Did you know that you can save tens of thousands... Read More
Buying foreclosures can be extremely profitable for real estate investors.... Read More
A good school district is a key factor in home... Read More
When looking for a new home or property, buyers ask... Read More
There are many frequently asked questions and any local real... Read More
When investing in real estate, it is highly desirable to... Read More
Spain has a lot to offer Northern Europeans and until... Read More
Lower Your TaxesTax incentives for real estate investors can often... Read More
The prospect of shopping for a new construction residence can... Read More
Real Estate |