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Real estate investment according to finance gurus is a sound investment.
What is important in the case of a real estate deal is whether or not the
investment is profitable and what its growth prospects are. The formula for
success according to leaders in real estate is just CLEAR:
1. The C stands for clash flow. Any real estate investment worth is salt
should be able to generate cash flow. How much cash generates would of course vary
and reflect factors like local rental trends, location, infrastructure, and how
much the property costs you in terms of down payment, loan repayments, interest
rates, taxes, and maintenance costs. Before you invest make a study of different
properties, their costs, and rental potential.
2. The L represents leverage. This is essential as the profit or loss on
any property investment depends on initial investments. Study aspects of leverage
this will help you maximize your property market foray.
3. The E is equity and is based on aspects like discounted price; a
potential fixer-upper; re-zoning potential; badly run down property; foreclosure
case and so on. It is advantageous to buy into equity at less than full value.
A good bet is a property where the seller agrees to a price reduction as work
needs to be carried out.
4. The A stands for appreciation in value. Buying a valuable property in
an up-and-coming development means sure fire appreciation of investment. But this
is very often a speculation or guess. Experts recommend a 10-20 year investment
period rather than a quick return investment. Aim for a property that will grow
at 5-7% and generate reasonable cash flow.
5. The R represents risk which is a factor that can make or break your
financial projections. Although many large investors do not pay heed to risk
it is an important factor to be taken into consideration. Always evaluate risk
in any investment and formulate an alternative stand by plan in case the
property fails to appreciate. Think how can I recover my money, will renting
solve the problem?
Investing in real estate is like playing the stock market, it is a gamble.
Always learn about real estate investment and study the potential before investing.
Never depend on real estate investments alone any financial plan should be rounded
and have concrete back up plans and systems in place.
To be successful you must:
Invest small amounts and not put all your eggs in one basket. Spread
your investments wisely in different investment options choose dependable as
well as risky avenues proportionately.
Make a study of the market and trends. Read expert reviews and advice
on real estate markets and trends.
Locate an ideal investment and make a thorough study of the property
its ownership, condition, zoning, and value.
Think taxes, insurance, maintenance costs, and environment. The surroundings
play a major role in property investment so be sure to study the area carefully.
Create financial costing and projections for the proposed investment and
get a professional to vet the property document.
If you are availing a loan, determine which loan is the most affordable
and whether the loan gives you any tax rebates or concessions. Always comparison
shop for a loan.
Weigh the pros and cons before investing and above all trust your instincts.
Invest wisely and property investments will yield good returns.
About Author
Barry allen is a freelance writer for
Real Estate Companies , the
premier website to find Real Estate, Real Estate Financing, Real Estate Agent,
Real Estate Listings, Real Estate Marketing, Real Estate Agency and many more.
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