The Real Estate Encyclopedia
Investing in Real Estate? Know Which Way to Go Before You Decide
Category - Real Estate Information Sources - Real Estate Articles
If you are looking for the ultimate investment option, real estate is definitely the way to go. Why? Because real estate property typically appreciates over time, you get tax benefits that you don't usually get with other types of investments, and if bought thoughtfully, rental property can produce a stable and predictable income stream.
While this should be enough to convince you, you canít put all your money into just about any property. Real estate properties come in various shapes and forms and it will do you good to know your options before you pick whatís best for you.
Hereís what you need to know.
Residential Property
For first time investors, investing in residential property can be the safest bet. A rental residential property can generate a steady income, but only if you can find tenants. So be sure to research the market well before you invest.
Knowing your target audience will also help you pick the right residential property. Even if your property remains vacant for long periods, you'll benefit from capital appreciation.
Furthermore, financing this type of investment is relatively simple. If you don't want to put all your hard-earned cash into a property, consider getting home loans from Newcastle Permanent or other lenders. Just make sure you'll be able to repay the loan even when you won't have tenants occupying your property.
There are various types of residential properties to select from. A single family home is the preferred choice of many investors. Multi-family properties such as duplexes, triplexes, or quads are just as popular. There's less competition involved and you get more than one unit by applying for just one loan.
Getting a home loan for a multi-family unit is easy as properties with less than four units are considered to be a single family house. Moreover, if you use one of the units as your personal residence, you'll be able to manage your property better!
You can also consider investing in a vacation home. However, vacation homes will cost more and you might only be able to rent it out during the peak season. So be sure to add up all the costs related to buying, managing, and maintaining the property before you take the plunge.
Commercial Property
As with residential properties, there are several types of commercial properties available for you to choose from. Do keep in mind that it is more difficult to find tenants for a commercial space as compared to finding tenants for a residential property.
While your tenant will have to pay maintenance costs, you will have to bear all expenses when you don't have a tenant. And commercial properties usually have higher operating and maintenance costs, which is why investing in commercial property can only be a good option for those with a bigger budget or those who are already in a good financial position.
Office spaces top the list for many real estate investors. They are typically located in downtown shopping centers or suburban office parks, which makes them a desirable investment. Additionally, there will always be a need for offices and a demand for space can cause rental rates to increase, thereby elevating your profits.
If you have the means, investing in a larger retail property can prove to be profitable. Especially if you can find a blue-chip tenant who is certain to occupy your rental space for a couple of years! Moreover, tenants occupying retail property are less likely to shift elsewhere compared to tenants occupying offices or residential property.
If offices and retail properties don't fit your budget, consider investing in industrial property. They are easy to manage and don't have high operating costs like offices and retail properties. Just be sure to consider functionality of the space depending on your target audience. Also ensure that the place you invest in is well-connected to major transport routes.
Investing in land is considered to be very risky, especially for small investors as there is only a slight chance of profiting from the purchase.
Raw land in particular, is a completely speculative investment as you can only hope for the land to appreciate in value so that you can sell it and gain some profit. This may take years though, and you can't forget the taxes you'll have to pay while you wait for the land to appreciate. That means hoping for a really good value appreciation!
However, land is not all that bad; investing in land is a great option for corporate land investors and home building companies. You could also consider investing in row crop land or livestock raising land. Remember that apart from paying a hefty down payment, youíll also need to put in a significant amount of money to start the operations you wish to on your land.
If you are a small investor, you could consider purchasing timber farms, vineyards, orchards, vegetable farm lands, mineral development lands, or recreational land.
Now that you know the types of real estate investments you can make, youíre probably all raring to go. Just make sure you choose wisely; you want this to be a profitable investment not just any random purchase!
Whether you have sufficient funds or intend to take a mortgage, do pick your real estate investment option considering your finances. Just do the right things and you wonít have to keep on worrying about making a profit!
Real Estate Information Sources - Real Estate Articles
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