Important Guide to Investing in Property

by Johnathan Bakers

A recent study suggested that 23% of homes sold in 2004 were originally purchased as a form of an investment. If you think about the substantial returns which people have historically received then this shouldn’t come of too much of a surprise. House prices have increased substantially during recent years. There are still several ways to make money from investing in property.

Flipping

This is when you buy property and then sell it again fairly quickly. This will hopefully generate a fair amount of profit. Alternatively you could keep the property for longer so that you can benefit from tax breaks and capital appreciation. Calculate how much everything will cost and compare it to the tax saved. Also remember to include interest charges, taxes for the properties, insurance and any repairs.

Property values have risen in recent years by quite a substantial amount. However the interest rates are also increasing and so it’s not possible to say when the property market will reach its ceiling price. As you all know it’s not possible to gain anything without any risk.

Apart from the gains by writing the tax off and the appreciation, it may be possible to offset some of the costs by renting the property out. However you must remember that finding tenants is not free, it may well consume a lot of your time and money.

Foreclosures

Another possible form of investment is looking into foreclosures, these are also fairly risky and will require a substantial amount of money. If the owner of a property is not able to maintain regular repayments on the mortgage over a period of several months then the property will be sold as a foreclosure.

Most foreclosed properties need a substantial amount of repair work done on them. Few people that are about to lose their home are bothered about the state of it. You have to be prepared to put in the extra effort to repair this home and get it up to a salable condition. If you personally possess the skills then these types of home may be more attractive than if you have to pay a contractor. This is true if looking for property for sale in Costa Blanca or anywhere in the world.

Investing in abandoned property is a very similar thing, there are also some extra legal considerations which you must make. Most foreclosed properties have a clear title, which will be whoever supplied the mortgage. With abandoned properties it can be very confusing to find out who has the title. If buying an abandoned property then make sure you are prepared for any additional legal searches.

If you want to make some profit from the real estate market but don’t want to put any of your cash down, sign contracts, or worry about the property then there are many investments which are just based on paper. Because investment is so popular there are several types of monetization of real estate, such as REIT’s which are real estate investment trusts. There are plenty of others, such as mortgage backed securities, property bonds, mutual funds, trusts, and stocks which are concerned specifically with real estate. Before you invest in any of these it is important you talk to a broker.

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