If you are sitting on a pile of savings and searching for investment options with high returns, real estate investment is worth considering. Here is a short guide to 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.
Ownership of a piece of land is an investment you can bank upon, as it needs value by development of areas in vicinity. With falling of property prices, many people will advise you to stay away from investing in real estate. If you look at it from a different point, there are many opportunities.
Properties, once beyond your budget, are suddenly within your range. For those who have been smart enough to save money in the past bearish decade, now is the time to invest and take advantage of the present opportunity.
Here are 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
You need to begin study of the investment options in real estate. 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.
Invest to Sell or Invest to Rent out Properties
The important decision is whether you buy to rent or to sell again for a profit. The first option is open, if you buy residential property. You can have a regular income source by investing in rental property.
Otherwise, you also have the option of entering the house flipping business, which is buying old houses, renovating them and selling them back again for profit. You may buy a piece of commercial property, hold it till the prices rise and sell it to make a substantial profit.
It's All About Location
Property investment is all about location. The price of any real estate property is largely a function of location. The localities decide the price range and so you need to research the price trends according to location, before a purchase.
Research & Do the Math
Once you have decided on what kind of property you plan to buy, what purpose you intend to buy it for and are clear about the amount of money you are willing to spend, start researching real estate listings to find properties that fit the bill.
Calculate the returns you plan to gain from the investment and the amount of mortgage loans you can afford to apply for.
Networking With Real Estate Agents
A real estate agent can make your job easier in finding properties that are exactly what you are looking for. Creating a good network of real estate agents who can point you towards good investment properties is essential.
Real estate brokers can handle the legal affairs associated with purchase and sale of property for you. They can make an offer to owners on your behalf and negotiate on your behalf.
Making Financial Arrangements for the Investment
Once you have decided on the property and made an offer, you need to arrange for the money you plan to invest.
A pooling up of your own savings and a mortgage loan if needed, can cover the total investment amount. Talk to financial institutions and mortgage brokers for financing options. The key to making good investment decisions in real estate, lies in research.
For a property, the location is the most important aspect of consideration and all other points come later.
Good location, with access to resources in its vicinity, creates an opportunity for eventual growth of property value.
With a pooling in of your own savings and a mortgage loan, you can buy strategically located properties and rent them to generate revenue, or sell them as the prices appreciate substantially.
You can't eliminate risk, but minimize it by putting your money into properties with high potential of price appreciation. Get a good real estate agent to advise you and a mortgage broker to assist you in the arrangement of finance.