Investment Property Advice

Investing in a property is a popular trend followed by many people these days. The real estate market is on its peak and land prices are not only sky high but are continuously increasing day by day. And this is the reason why many people are investing in properties so that they can reap greater benefits in future. With increasing land prices, the cost of infrastructure development and construction is also on the rise so investing in property is considered as a smart choice today. If you too have some great savings and are planning to invest in a property then read this article further. This article shares some real estate property investment advice with you.

Investment Property Info

Before you buy or invest in any property you must consider the following things carefully:

Kind of Property
You also have to decide about which kind of property you wish to invest in, commercial or residential property. If you wish to use the property as a office or business center then go for commercial property. If you just thinking of an investment then residential property is a good option.

Location of the Property
Where the property is located matters a great deal. In prime locations rates can be very high so think again if you are really going to get any benefit by investing so much. In the same price you can invest in a suburban area. One of the important commercial property advice is that you also have to think about the property in terms of maintenance and surveillance. If the location suits your purpose then go for it.

Cash on Cash Return

Every investment is only as much worth as the return it generates for you. In every business, you have to evaluate profitability if you want to have any hopes of staying afloat. More importantly, you need to calculate the cash inflow for every investment you make. When it comes to real estate investment, one way of knowing the profit generated from a venture is to calculate the cash on cash return percentage.

Of all the investments you will make in your lifetime, one of the most important ones is real estate investments. If you have bought a property, not as a home, but as a pure financial investment, you need to evaluate the cash return that it is generating for you. Cash on cash return is a ratio that will help you understand the profitability of any of your real estate investments.

What is Cash on Cash Return?

It is the ratio of the profit or cash flow generated by a property and the amount of net investment made in it, multiplied by 100. The cash flow or profit generated, which is used in its calculation, does not include taxes charged on the returns. That is, the profit considered is before taxes. Thus it is the percentage of cash that is recovered from your initial investment in a property.

How to Buy Commercial Property With No Money Down

About two decades ago, if you did not have 20% of the down payment for buying a property, not many banks would have entertained your mortgage application. But times and changed and how. Today a down payment of around 5% is good enough to buy a commercial property. But is a zero down payment realistic? The answer is yes, but it has its own baggage of certain terms and conditions. Read on to know more.

Seller Financing
Suppose, a property is evaluated at $100,000. You sit down with the bank officials to discuss the interest rates, repayment plans, foreclosure charges etc. The bank is willing to finance 90% of the total amount, leaving you with round about $10,000 as a down payment. What if you propose a second loan of $10,000 at a higher interest rate. If you have a decent credit rating and are willing to pay a little higher interest rate, the bank might finance your down payment, with you buying the property without paying a single dime as down payment. But, you have to keep in mind that every month you would be liable to pay monthly installments on both the loans, and it may take a huge chunk out of your salary. Also, personal loans charge the higher interest rates - roughly around 20%, and you will have to pay a lot extra than you would have taken.

Rural Development Plans
Another way of buying a commercial property is to apply with the USDA rural development plans. It provides you with 100% financing for your home purchases and one does not need to be a first time buyer to qualify. Some of the benefits of buying a home this way is that there is no cap on the purchase limit and you can include the repairs and improvements in your loan. The property that you want to buy should be in a qualifying area as per the USDA rural development guidelines.

Investment Property Financing

Have you ever considered real estate investment as a measure to generate capital gains or rental income? An investment property promises good appreciation in the coming years and a lot of people are applying with banks, mortgage money lenders, etc., in order to finance their investments. Loans are the most common forms of investment property financing. There might be cases when one is able to borrow from family and friends, but more often that not banks and private money lending agencies are the institutions one looks forward to while thinking about financing a property. There might be some real estate investors who have got enough funds to buy the property outright, but a majority of prospective investors look for the various sources of financing.

Investment Property Financing : A Few Guidelines

While you may be all excited about owning properties and increasing your monthly income, there are certain strategies that you should know before obtaining an investment loan. Some of these strategies are

Knowing the purpose are you borrowing the money for. While talking to your lender make sure that you reveal the true motive behind the financing. If it is a second home or you want to put it up on rent, let the lender know about it.
While calculating the mortgage payments, the plan of action for most people is that they pay off the monthly installments through the rent they receive. While this is good business planning, things can go wrong if you are not able to find a tenant. So, ensure that you are in a position to pay regularly from your funds so that things like foreclosure, bad credit rating etc., can be kept at bay.

Property Investment For Beginners

Traditionally, one of the best high return investment options has been investment of money in real estate. While the property prices may go up and down in the short term, over the long term, they have always appreciated substantially. The ownership of a piece of land is an investment you can eventually bank upon, as it acquires value through development of the areas in its vicinity. With the falling of property prices, many people will advise you to stay away from investing in real estate. However, if you look at it from a different perspective, you will see opportunity in this situation.

Properties which were once beyond your budget reach are suddenly within your range. For those of you who have been smart enough to save money throughout the past bearish decade, now is the time to invest and take advantage of the opportunity, which has presented itself. In this Buzzle article, I shall share some tips on real estate investment for those of you, who are smart enough to recognize the opportunity this recessionary background has presented.

Tips on Property Investment for Beginners

Any investment comes with its share of risks, which cannot be entirely eliminated but lessened through research and planning. Same goes with real estate investment. You have to do your homework and get your research right to end up on the winning side. Here are some tips for beginners.

Know about the Range of Real Estate Investment Options
Firstly, you need to begin with a study of the varied range of investment options in real estate, which you may consider. You may invest in buying residential houses, commercial properties, condos, apartments or purely specialize in land investment. There are a lot of options out there and you need to consider the entire range, to decide which would ideally suit your investment budget and align with your future plans.

Real Estate Vs. Stock Market Investing

Recently in the Forbes magazine, I came across, a delightful term, 'accepted wisdom'. My interpretation is that accepted wisdom is something that is handed out, free of cost, and is irrational and illogical. But here, I will provide some insights that are based upon logic, not on accepted wisdom and certainly not my personal wisdom that are sure to help you tackle your dilemma about investing in real estate or stocks. The problem with both the fields is that you cannot set an arithmetic equation which is 100% correct, to ascertain the rate of return on investment that you would receive. Hence the confusion and dilemma, as both options seem equally pleasing and at the same time uncertain. Well, every channel of investment has its own pros and cons.

Investing in Real Estate

When clearing the dilemma about where to invest - real estate or stock market, you must have a time frame in your mind. The time frame for any kind of real estate investment ranges from 7 to 30 years depending upon the size and the purchase cost of the real estate. The actual amount invested in it would amount to about 15% or so of the equity value of the real estate. To gain a good return on the total invested amount, you will have to look for a real estate which has a rising equity value, that is the market value of the real estate should be on the rise. So here's how the usual mechanism works out:

First off you will have to finalize the actual property or what kind of real estate you are looking for. It can be anything right from bare and barren land to a studio apartment.
Now, when you try to find and finalize the type of real estate there are some very essential factors which you would have to consider. How safe is the neighborhood?, is a prominent factor of these. A safe neighborhood means a rise in the equity value of the investment in future. Similarly, a huge mall nearby, means a rise in the equity of the real estate. A New Mount Rushmore like site in construction near your property, can bring rise in the equity.

How to Start Investing in Real Estate

Real estate has always been a good investment option. It is also a much safer option compared to other forms of investment such as the stock market. However, before you invest your hard-earned money, it is necessary that you are aware of the risks and expected returns from the investment. So, this article will give you some pointers on how you can go about beginning your foray into the real estate business.

Market Study
If you wish to invest in real estate, but have a limited budget, then conduct a thorough market research to know about attractive investment opportunities. By doing a careful study, you will understand which property deal suits you the best and will generate the maximum returns.

Fix Your Budget
First fix the budget for your realty investments. Decide what is your investment capacity first. Before you decide the amount to be invested, take into consideration factors such as your annual income, current liabilities, monthly expenses, etc.