Real Estate Investing
Real Estate Investing - Buying Rental Property
Moving away from the stock market now, real estate is also a very viable and profitable area that is worth considering for investments. If you are considering the buy to let route, where you receive a regular monthly payment from the people who are renting your property as well as gaining some capital increase in the property value then these investments are worth considering.
There are a few important points that you need to bear in mind before you purchase a property. One of them is purchase equity, which basically means to have a good idea of what the average Joe would be willing to pay for the property that you have in mind, as compared to the current price that is being asked for it. This is so that if you do eventually want to sell the property, you will be able to sell it for at least what you paid, if not for a profit after having gained a reasonable amount from the monthly letting.
One way to determine this is simply by talking to the realters in the area about what the current prices are being paid for similar properties in the neighbourhood. Another way is to go to the City Hall and have a look through the local records, which will tell you the recent prices paid for similar properties. Perhaps the most helpful way of finding out the real value is to actually advertise the property in the local newspaper and then find out what response you get to the advertisement. If anyone responds on the basis of the price that you asked for, it is a good indicator that it is a reasonable asking price for that property.
There are also some other indicators that are not directly related to the house that you are intending to purchase. One of those is the likelihood of all properties in the neighbourhood maintaining or increasing their current value. Another one is to observe the state of the economy both nationally and locally; Whether that will have any effect on the people who are currently owning properties in the neighbourhood. If, like at present, the property values are decreasing pretty well across the nation and many people are finding the credit crunch is hitting them, then more and more houses will be going on the market and therefore the overall price will continue to drop. As they say, timing is everything.
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As your main interest in purchasing a property is to obtain a monthly rent all year, you want to know how much you are able to reasonably charge for the property. Sometimes it's worth converting the property into two or even three apartments. This of course, will depend completely upon the requirement for smaller sized accommodation units in the area of your property as well as the local laws about converting properties. Another thing to consider is whether you have any recurring expenses such as for services or local taxes. What will the annual insurance bill will be for?
There are people who have made an extraordinary amount of money through investing in real estate but these people bought at the right time in the right area for the right amount of money. They have realised a substantial amount of profit through the rental fee and have also been able to sell the properties when the prices were high. You too can become a very savy property investor. Just like investing in stocks and shares, it is also wise to educate yourself regarding the property investing sector. It is much better to be wise before the event, rather than after it. |
