Real estate is one form of investment category that people around the world consider when they want to capitalize on their cash. It is also one of the oldest investment categories and markets the world over. Buying a home for yourself is one thing, but buying a property purely for investment purposes quite another.
Whether it is a Thane property or a lot of land in hills, buying real estate should not be just an emotional decision; there are a number of things to consider when assessing whether the property in question is the right investment choice for you.
Whether it is residential or commercial real estate, there are loads of options for buyers out there today and the main problem lies in finding the kind of property that works for you and works for your investment.
Let us take a look at a few different steps you can take when choosing the best property for your investment purposes –
- Do detailed research on the kind of property you want – Not all real estate investments are created equal. Any real estate investor’s aim is to grow their capital and get returns on their investment. Therefore, looking at a piece of property whether commercial or residential that is likely to increase in value over time and provide you with ample returns should be the goal. Also, property that will help ensure a regular cash flow through rental and other income makes it a much more viable asset and helps you manage your financing.
- Assess your gain goals – It is important that you assess what you need when it comes to a property’s income earning potential, whether it is short term gains or long term. For e.g. When it comes to residential real estate if you buy something like an apartment or flat you can count on it for a steady rental income flow from the get-go as soon as you find tenants, whereas if you buy a lot of land in an upcoming residential neighborhood you cannot expect rental income but the vacant land may fetch big returns in the years to come.
- Don’t ignore the math – When it comes to choosing property as an investment, always keep in mind that investing here is usually a long term benefit and something you will be putting a whole lot of cash into or borrowing cash for. When looking at different options you have to take different taxes and other expenses that you will have to incur into account. Out of pocket expenses like land taxes, stamp duties, capital gain taxes, loan interests, etc. can significantly change what you think you are going to be paying. When doing calculations also take into account the fact there might be chances of vacancy and period where you will not earn any income due to lack of tenancy.
- Thoroughly investigate the property in question – You may find a property that looks suitable and is in the right location and price range, but does not under any circumstances not look at what lurks beneath! The basic foundation and systems of the place like the electrical systems, roofing, water supply, the structure and the like should be thoroughly checked out by a professional inspector. Any issues with these aspects later and you will have to bear huge expenses to get things in order. Always make sure you also check the age of the property and its condition and facilities.
10 Myths Prevent Entrepreneurs To Invest in Real Estate
Starting a real-estate business is not always easy, but anything worth doing usually involves some level of risk. Despite some obstacles, the property market continues to rise, making property investment an attractive option.
Investment in real estate has always been seen as an appealing way to get involved in the exciting world of property and making a healthy profit along the way. But with shifts in the market, many potential investors are being put off.
While things have certainly changed, there are some myths which are untrue and may help investors regain their confidence.
Myths and the Truth
Property Is No Longer a Good Investment
With tales of doom and gloom widespread, it’s understandable why some entrepreneurs may be reluctant to start their own real-estate business. However, people will always require homes and the market will always be somewhat buoyant, meaning that options are still available for those with their finger on the pulse.
Property remains a sound investment and while it may not be as easy to make money, there are still many rewards waiting to be reaped, especially in the booming buy-to-let market.
Houses Aren’t Selling
The sheer number of ‘sold’ signs seen every day would suggest that the idea of properties not selling is actually one of the biggest myths of all. Spring is traditionally the best time to sell and this trend is continuing into the summer.
Dedicated websites such as My Online Estate Agent can be useful in terms of narrowing down the options and highlighting the properties doing well and their market value.
Property Is Too Expensive
While many people believe the property is currently overvalued, it is in fact very affordable. The market has fluctuated in recent years but things have now stabilized, leading to fairer prices.
News coverage of the financial crisis has perhaps created an inaccurate picture of the property market but it’s still a buyer’s market. With cost-effective options such as auctions and repossessions, there are plenty of opportunities.
Property Investment Is Too Risky
While there will always be a degree of risk with property development, the amount of risk is determined by several factors and there are many things to take into account. Developers who know the market, do their research, take a cautious approach and invest wisely are minimizing their chances of falling into difficulty.
Once professionalism is applied and the financial implications are taken into account, there is no reason why becoming involved in real estate need be any riskier than before.
Experience Is Vital
It may be true that experience can be useful when it comes to real estate, but sometimes the best investments are made by people with no prior experience. Common sense is the most important thing, as well as staying in tune with developments and retaining a level of focus and single-mindedness.
It’s Who You Know, Not What You Know
Another misconception is that success is dependent on knowing the right people or having inside knowledge or contacts. While this can certainly be useful, it can also be distracting. Professional resources such as My Online Estate Agent can be useful in helping investors build up their knowledge and confidence.
You Need Plenty of Capital
It used to be the case that property developers had a lot of disposable income and a large pot of money to invest, but this was before lending became as widespread as it has become in recent years. The deposits required now are often much smaller and there are ways of managing property portfolios without a huge initial outlay.
Banks Aren’t Lending
It was true that during the peak of the financial crisis many banks stopped large-scale lending, but as things have gradually improved the banks have begun to return to lending patterns which are viable for those investing in real estate. Lenders are perhaps more cautious but this is no bad thing and avoids both parties finding themselves in an unmanageable financial situation.
Profits Are Minimal
There is little truth in the myth that profits are dwindling, especially for real estate investors who are very clever about the properties they buy. Knowing the market and having a target buyer in mind helps you to focus on the profit margin and ways to achieve it. There are several things which can improve your chances of success, including buying in up-and-coming areas, improving properties and buying at a competitive price.
Completion Times Are Excessive
There can be an assumption that due to the ups and downs in the real estate market property sales are falling through and that completion times are incredibly long. This can be extremely off-putting for those in the business looking for a quick profit. It’s important to remember that patience is necessary for this game, but also that transactions can still be completed quickly if conditions are favorable.
5 Examples Of Fallout From The Global Property Price Crash
Property speculation, property price rises and property price crashes are all part and parcel of the world of money, investment and assets.
However, since the economic crash of five or so years ago, we’ve seen some really hard landings, where the wheels most certainly came off. So, let’s take a look at some of the worst crashes in living memory.
Still firmly in the grips of a recession and with an ever-increasing jobless rate, Spain’s property prices really fell in recent years. Some areas have seen falls of over 70 percent since 2008, that’s a colossal amount. Spanish house prices themselves fell by around a fifth in 2012 and with issues far from over, it seems they could fall again significantly in 2013.
However, in mid – 2012 prominent magazine The Economist still states that they are on average 27 percent overvalued still – so the bottom may not yet be nigh.
The Irish property market is seen as taking one of the hardest hits ever and according to a report from Irish property site Daft.ie, falls are over 53%. The fall has lasted longer than the average in an OECD developed country and also has been sharper too and this is still continuing almost five years into the crash.
The average house price, however, doesn’t show all that needs to be seen. In the USA median house prices fell by 20% in the five years from June 2006. However, when we look across 140 metropolitan areas of the country separately, we see that there are vast disparities in how areas fared.
In accordance with US realtor figures, 27 cities saw a rise in the median price. However, a number of prominent cities such as LA, Orlando, and Las Vegas have seen falls of over half. Detroit fared worse with a fall of 66% in the time period. Most of us would say we buy any house when things are going well, however when things aren’t it’s different.
Greece has probably suffered the worst fall out financially of any of the European countries and it has also been the slowest at taking its medicine. Greece’s government is still in denial at the issues facing the country and has failed to find a financial formula to end its downward spiral. According to statistics in 2012, the country saw a property value fall of 30% in 2012 alone.
Most recent bailout area Cyprus has really had to come to terms with the financial meltdown and prices are predicted to fall by up to 40% in the upcoming period. This is partially due to Russians with their homes in the area thinking they have to rush to find someone to buy my house.
Prices have fallen significantly in the timespan prior to this but due to the deteriorating crisis, it looks as if this double-digit price drop will afflict prices furthermore.
So, as you can see what goes up must come down in many instances and with a hard bang from the figures suggested here.
Top Ways to Save and Invest in Commercial Property
Commercial property is the new magic word in the dictionary of the real estate world. It has time and again been proven that the real estate market never fails in delivery some of the best options in living spaces, but now it has taken on this new adventure on seeking to make the workspace an ideal one.
It has remodeled the workspace according to modern notions of working and has mixed in the sublime art of the Traditionalists with the architecture of the present.
It has transformed the worksite into one of on storytelling where the tales business productivity and enrichment are transferred through new ideas and concepts to the employees. (For example, owning an office in BKC is the next in-thing in the commercial property biz when it comes to investment in the trade hub of Mumbai, India).
Workspace or House?
Buying a workspace is often compared to buying a house. But it is not so. Residential and commercial properties are two completely different zones of investment where each has its own set of demands to cope up with for the client’s satisfaction.
Therefore while investing in commercial property one must be completely aware of the facts and figures involved in the process. One thing between buying any kind of property is to have a very clear vision of the type of property one is interested in investing in. It could range from simple one-room structures to duplexes to buildings where a multinational company wants to set its base.
Can Be Good Investment If Making The Right Decision
Experts in the business help out with few tips while looking out for the commercial property. As we all know buying property is a major form of investment since it is a lifelong mode of gaining returns. Therefore, it has its clauses and one should be thoroughly aware of all the aspects involved while dealing with property.
Hence it would more than beneficiary if one plan out things well in advance and thereby ends up saving some amount of income rather than spending the complete amount of it. One of the best ways to ensure a high rate of saving money while involving property buying is to look out for upcoming projects in the field.
Upcoming properties are sites where the entire concept of the property is laid out along with the floor plans and its varied accompanying features.
It promotes its project well in advanced so prospective buyers can book properties early. This assures the buyer the best of deals since after the property is constructed the prices of it will rise consequently.
Hence invest in the workspace that has still not started with its construction mode and matches your vision of an ideal property so as to save on additional expenditure. Another smart way of saving from spending too much on buying a commercial property is to make sure that the locality of your property is not that famous or well-known.
Everyone in the estate biz banks on selling the best locale properties on the highest prices. You could be a bit edgy by selecting a locale close to the ideal one since that would ensure that you can still be a part of the best of work culture by being a hop, skip and jump away without paying off more than you can afford.
The simplest ways of saving money on commercial property are to check out all the option available and the all the price ranges offered alongside on the property market and to make sure that you could select the best one without spending a bomb.
The Necessary Traps to Avoid During Property Investment
Buying any kind of property comes with its baggage of responsibilities and risks. Every investor needs to understand the necessary seriousness of the task in front of him and commit himself to get the best of the deals using the most reliable of resources.
The real estate market is sometimes slacking sluggishly behind and at times is soaring high up which makes it critical for any potential buyer to understand its current trends and workings, thereby giving him a complete idea of what he would be dealing with in the near future.
The boom of Tourism Stimulate Property Investment
Tourism and travel have led to the boom in the real estate world and cities and countries which were hidden behind the screens of foliage and seas are now becoming towns to explore and leave your footprints upon.
It is the travel industry that has also widely brought into focus the entire concept of the holiday home and this is generally regarded with the sense of leisure and luxury that can be allowed once in a while to escape from stressful city life.
Some of these places include islands from the Caribbean coasts which offer exquisite beach homes and penthouses, while the city of Punta Cana offers Dominican Republic apartments for sale along with adjoining outdoor activities like snorkeling, scuba diving and paragliding on its pristine white beaches and clear blue waters.
Expanding of Real Estate Market
As the estate market expands it also generates a host of options in its everyday market. This attracts a lot of investors to zoom in and buy properties. At this juncture, there are some of the evident errors that one could avoid while considering property investment.
The first and important factor that leads to the downfall of any investor is investing in properties just because every other investor in the market is doing so.
This kind of herd mentality leads to a very narrow outlook where the investor fails to evaluate all the aspects of the property in concern and goes into delving his capital on very random reports and valuations.
The second factor that usually leads to the downfall of an investor is not having efficient management resources. Having a bad real estate agent or not being able to manage the flow of cash necessary for the mortgage or down-payment for the property are aspects that are crucial when considering property investment. Good investors are well aware of all the necessary procedures that consist of the property trade.
Also, they have an extremely well planned viable business plan that will ensure them capital flow on their investment gains on the property. Not having a secured business plan is one of the other dooming factors to avoid while you consider property investment.
Another fatal error to avoid is the lack of market knowledge while considering property. Do not circulate with a single property in mind. Make sure that you view as many properties available on the market as you can.
The more amounts of properties you view the more you will become aware of the pricing scenario going on at the time in the market.
Property dealing is not restricted to research. It is also about getting into the field and playing your cards right. This requires the perfect market timing when the demand ratio is not over the supply quotient since this indicates that you will be provided with the best of deals in such a situation.
Property dealings and trade is a subject of importance and detail. Make sure to pay attention to every aspect of the best deals.
Reasons for Investor to Buy Memphis Investment Property
Memphis is the largest city in the United States which was established in the year 1819. In the 19th century, it was just a transportation center and later it became a big slave market. It plays an important role in the American civil war and it suffered a big setback in the time of 1870 because it loses its population due to the yellow fever epidemic.
Stronger Economy Development
The economy of Memphis develops stronger as well as it became the big cotton market place and lumber marker in the world in the year 1950. The beautiful movement of the nation changed Memphis city to have more parks and public works.
It contains a good cultural background as well as it is the home for more renowned musicians such as Johnny Cash, Elvis Presley. B. King, Robert Johnson, and others.
It also became more popular to establish music genres likes, Gospel, Blues, “sharecropper” country music and Rock n’ Roll. It has different entertainment activity as well as it makes this place as a famous tourist destination for travelers all over the world.
It has been said not only for the cheap markets for home buying now but it has been also said as one of the markets to have good appreciation value in the year 2011.
The predicted value is about 1.5 percent. It is greatly undervalued now in terms of property values and the undervalue is about 21 percent. These are essential factors that make Memphis a good attractive investment substitute.
Significant Fall on Home Value
The other factors which are playing in the market today are Median Home Value fell to $99,965 in Memphis which is very cheap. The undervalue of Memphis is said as about 21 percent. Since the home value costs have stayed under value, there are lots of possibilities for the investors to look for it.
The foreclosure and also keeps the supply park high as well as costing for the investors undervalue. More than 48percent of SFH are rental properties in Memphis. It is not like other markets, it is a strong durable rental city and most of the single-family houses are non-owner living in the rental properties.
There are plenty of renters than homeowners in Memphis. The rates of mortgages are predicted to go high to the average of more than 6.25 percent at the year-end that stays low even after the great hike.
Even the job field expected to look at the development in various factors like defense, supply, staffing, medical as well as distribution areas. It shows that demand for rental houses will remain strong in Memphis.
The researchers believe that the job market will be strong with unemployment at the rate of 6 to 8 percent. It is also expected that 2012 will be a wonderful year for real estate investors in Memphis.
Different situations mix to make Memphis a gold mine location for investors. it may take 3 to 5 years for the real estate market in Memphis to change. It is a positive sign for the investors who are finding to purchase Memphis investment property.
Read also: Top Ways to Sell and Market Your Property