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Mistakes in Real Estate Investing

1. Buying the first house you can. In the eagerness to get started investing, some investors jump on the first property that they find available. Some of this is due to over excitement, some due to laziness (not wanting to look any more) and some due to fear – that there won’t be other deals. There are always deals to be made in the real estate market. Only buy that first property you see if the numbers work.

2. Being more eager to buy than the seller is to sell. Real estate investing is not like purchasing a home to live in. It is strictly a business transaction. Don’t make the mistake of offering more than the numbers say will work just because you really like the house. And, a seller who is not truly motivated will only waste your time trying to get you to come up on your offer. Time better spent with someone who really does want to sell.

3. Not thoroughly inspecting the property. Buying an investment property is more than just how cheap you can get it. Some properties are cheap for a reason – they need a lot of work. You need to have a thorough inspection done on the property so there are no surprises when you start to work on it. Every day that you are having to add to your timeline to fix items is a day that you are losing money. Plus, you may be able to negotiate an even better price if you have a complete inspection to bargain with.

4. Underestimating fix up costs and time deadlines. It doesn’t matter if you are buying the property to hold and rent, or to fix and flip. Going over budget is the biggest problem most investors have. Also, going over the expected time line eats into your bottom line and increases your carrying costs. Err on the side of caution when creating your numbers and then add at least 10% to that to give yourself a cushion. This is why it is critical that you actually have some cash reserves. Without cash reserves, you will be in big trouble if you go over budget, or cannot find a buyer/tenant for your renovated property.

5. Not having proper insurance. It doesn’t matter if you plan on keeping the property to rent or if you are going to sell it, you need to have insurance while the property is in your name. It is especially critical if you will be having tenants. You need to protect yourself and your property. It is worth it to consult with a professional on this, the money you spend here can save you tons of money if someone were to try to sue you.

 

Real Estate Investing Tips

# Perhaps the most lucrative investment technique is to buy a run down property, fix it up, and then sell at a significant profit. Since the property is shabby, you might be able to acquire it for a low price. However, you must ensure that the cost incurred in the repair is restricted to a minimum so as to guarantee a profit. You can do this by making sure that the basic amenities are in place, without going overboard with the renovation. Such a buy-fix-sell scenario demands excellent property valuation skills and a rather frugal attitude while renovating.

# Purchase properties that are about to face a foreclosure. A property typically faces foreclosure when the homeowner is financially distressed and is unable to repay the loan. Another common reason for foreclosures is dissolution of marriage with the abandonment of the house by either of the couple. Such a distressed property can be bagged for a low price by an articulate investor, who can convince the homeowner to sell the property prior to the foreclosure sale. Then the investor may sell the newly bought property at a significant gain.

# Locality is a paramount aspect in real estate investment. Two similarly built houses may have varying valuations if they are situated in different locations. So, you must be abreast of the hot locations in your concerned region. If you are just about to start you real estate venture, I suggest you look for places that offer high rentals. Purchasing a property in such a region would result in a healthy monthly source of income.

# Ever heard of Warren Buffett? The acclaimed stock investor made billions through a contrarian’s approach to stock investment. You may take a contrarian’s view to real estate investment as well. For instance, you may buy a property when it is out of favor with the majority of investors. That is, acting in opposition to the majority opinion. A contrarian’s approach is not a sure shot path to real estate success. Moreover, it’s complicated and therefore beginners are advised against it.

All in all, there are several avenues that you could realize profit in real estate. However, it is imperative that you be prepared to put in extra work hours, especially at the beginning of your real estate career. Putting your shoulder to the wheel is what’s required to make substantial profits in real estate.

 

Basic Investment Tips for Newbie

– Have your real estate team ready before you begin serious property search. You must have a team comprising of an efficient “bird-dog” (person who searches for profitable assets), tax advisor, lawyer, and a loan officer. A team would help expedite the process of bagging an asset, which is crucial if you wish to stay ahead of your contemporaries.

– Don’t invest too much too early. Work on residential properties initially, as that does not involve much funds and experience. Once you have mastered such assets, you may move on to commercial properties and large apartments, which offer greater returns.

– Location of the asset is pivotal. Another tip on real estate investing for beginners is not to disregard the location of the asset that you plan to purchase. Owning real estate in a developing area, with new and renovated properties, enhances your chance of accomplishing significant returns.

– Avoid purchasing new or fully renovated properties. As a beginner, you should usually avoid buying new or fully refurbished assets unless they are at a prime location. This is because such properties don’t have much margin, as the upside has already been taken by the current owner. It’s best to purchase property during its initial phase of development, since the price is quite reasonable at that time.

– Invest in real estate that is not remote. Look for property within a couple of hours drive from your home or office. This way you can easily keep a check on your assets. You may widen your net when you have a few managers, who can take care of remote properties, at your disposal.

– Don’t go overboard if you bag a profitable deal at the outset. One of the most valuable tips on real estate investing for beginners is that real estate investment is not a walk in the park. A lone profitable deal does not guarantee another in succession. Real estate is all about astute investments and feeling the pulse of the market. It is advised that beginners maintain a gradual progress rate, without being over enthusiastic. Once they are experienced enough, they can afford to employ a few unconventional tactics.

As we come to the conclusion of our primer on real estate investing for beginners, the tips outlined above may seem rudimentary to some. But the fact is that real estate investment is not for everyone. Some people just can’t deal with distressed homeowners, fixing shabby houses, or a sudden slump in the market. Therefore, it is advised that wannabe investors have a clear grasp of what real estate is all about, and be sure that they can handle the occasional hiccups in the market.

 

Time to Invest In Real Estate

Let’s begin with the facts that are stopping many would-be first time real estate investors and even some experienced pros, especially when you believe the stock market is beginning a great upswing.

1. We are in a turn-around economy (depressed, it you want to really be negative about it).

Comment: Yes, the economy is slow. People are pulling back. Anyone who wants to sell their home, and can wait it out, is not willing to sell now, while prices are down. Those who MUST sell, are taking much less than they could have sold for six months or a year ago. But, it may not be all bad. My wife has a home listed that, six months ago would have sold in a minute for $380,000. Now, the price has been reduced to $325,000 and it still hasn’t sold. Now consider this. The home was purchased a few years ago for $110,000. Sure, it would be nice to find a buyer at $380,000 but even a $310,000 selling price will result in a $200,000 profit for the seller. Remember, this applies to someone who must sell now.

2. Real estate just isn’t selling. We are in a “buyer’s market” (right now).

Comment: We are in a buyer’s market. If you have considered beginning your real estate investment program, now is the time to jump in with both feet. You’ll have a large selection of properties from which to choose…at realistic prices. Even if you are starting out with a single family home to rent out, your selection of well priced homes should be plentiful.

3. Home prices are out of reach for many potential buyers.

Comment: Fortunately, or perhaps unfortunately for home sellers, point number three works in buyer’s favor. If you own a small home or apartment complex, you’ll find all kinds of tenants who are priced out of the home buying market and must rent for the indefinite future. You’ll have a ready market of potential renters.

4. This is the time you need to wait and see what is going to happen to the economy.

Comment: If you are serious about becoming involved in real estate investing, now is NOT the time to wait and see. As soon as the economy turns around (which it always does), you will not have the selection of properties and potential tenants that you have right now. Now is the time to get serious about securing your financial future in real estate. If you don’t, prices will be high again before you are ready… or knowledgeable in real estate investing. Let’s add one more factor to make it even more dismal.

5. Many cities in the country have manufacturing plants that are out-sourcing, laying off employees and reducing or eliminating pension programs.

Comment: Not only do new corporate policies and layoffs flood the market with the need for more affordable housing, but it creates a need for a way of securing your financial future other than relying on corporate retirement programs that may or may not be around when you need them.

OK, is that enough to make you want to crawl into a hole until things get better?

Bottom Line: Historically, our economy has periodic slow periods followed by economic booms. Right now we are in a slow economy. That means that right now is the time to become involved in a real wealth building program…real estate.

Unlike the stock market, real estate is slow to react to changes in the economy. You don’t have to worry about getting up in the morning and learning that the value of your investment has just dropped five or ten percent or more. You have time to plan ahead.

Have you ever wondered why when the stock market jumps up 50 or 100 points in one day and the media proclaims how great it is? The next day it drops a like amount but they refer to it as “an expected adjustment”.

Now, let real estate sales slow down and prices come down and real estate is blackballed as a sign that the economy is in a recessionary period and home sellers are in a most undesirable situation, that they have to drastically reduce their prices in the hopes they can sell. The media fails to point out that the home will still sell, in most cases, for a lot more than the owner paid for it. We saw an example earlier in this report. This price reduction only applies to someone who must sell now. Somehow, most medial coverage overlooks the ‘must sell now’ part of the equation.

The most important consideration is to find a way to secure your financial future. Real estate, over the past 200 plus years, has proven to be the finest way to do it. Before you sit back and think, “Hey, I’ve got it made doing what I’m doing”, here’s a frightening statistic regarding your financial future:

Did you also know that 95% of our population, over the age of 65 cannot afford to retire? In a national survey made in the 1960s by the Kennedy Administration, they discovered that 22% of the people over the age of 65 relied on charity for survival, 28% had to continue working and 45% relied on relatives for survival.

That survey was repeated a year ago, before corporate layoffs really started taking hold, and the new survey indicated that 95% of our population over the age of 65 were still not able to survive retirement without outside support.

That ninety-five percent did what you and I have always been taught to do…they saved their money for retirement. But, they saved it in the wrong places… places that guaranteed they would not have enough to support them when they quit working.

If you’re dreaming about a secure retirement based on social security and your corporate retirement program, you may be in for a startling awakening.

Real estate investors have proven you can avoid this trap. There is, however, one vitally important contributing factor to successful real estate investing with minimum risk… knowing what you are doing!

You need to study a real estate investment program will lead you through the professional’s methods of real estate investing. A program that is spelled out in easy to learn and use, step by step procedures. One that offers support through each phase of real estate investing.

Maybe you don’t want to begin investing right away? Perhaps you are still a disbeliever. I’d suggest taking a course and then make that decision. If you choose the right program, you’ll be anxious to begin securing your financial future as soon as you discover how easy real estate investing is and how you can become part of this bonanza. If you still decide to procrastinate, you’ll at least have all of the knowledge you need to jump in when the urge strikes you…and I’ll guarantee you’ll do it sooner than you think!

One more point: If you have been tempted by the late night infomercials you see on TV, promising you can get rich quick with no money or credit, check them out on your Internet search engines. Read some of the reviews written by those who have taken the $1,000 and up boot camps or seminars. Be sure you are not reading a promotion written by the company giving the seminar. You’ll quickly learn who has a program you may want to try that offers easy to learn and use systems with minimum risk.

 

Negotiation in Real Estate

To effectively negotiate terms of a property sale, you ought to understand the position of the seller, his underlying reasons for selling. Is the house approaching foreclosure? Are there other factors contributing to his or her motivations? And, if so, what sort of bargain is he or she willing to provide?

Ask questions. Find out how long the property has been on the market, how many competing offers are presently on the table, the current bid. Be weary of properties that have been passed up for extended periods of time. That is, unless you conduct (or contract) a thorough inspection.

If possible, inquire about outstanding debt on the property, whether or not all payments are current, and so forth. Most sellers will volunteer all sorts of information if you inquire appropriately. There is technique involved here (you must be able to draw information from near-strangers). It is a skill that will only strengthen through practice.

You will already have gathered information about the condition of the house, and the market factors that led it to its current value. Check online, or consult a broker. Know the value of comparable properties BEFORE negotiating.

Speak with neighbors to help sharpen your comparison. And pay close attention to the condition of neighboring homes. Neighborhood is an extremely important selling factor, and it would be wise to steer clear of those which appear in a process of deterioration.

Prior to negotiation, assure yourself adequate financing. Get pre-approved. Cash-in-hand is a persuasive tool. Make accurate bids. Don’t suggest round figures. Ambiguity is a sign of poor negotiating skills, and a lack of familiarity with the process. A specific figure shows character and confidence. Be direct.

Be certain, also, that your offer is fair, and consistent with current market value. Low-balling will not motivate the seller. A bid that is too high leaves you with nothing to bargain.

Remember: there are many items up for negotiation. Property cost is only one of them. You can negotiate over closing costs, who is to pay what percentage, insurance, realtor fees, title costs, and so forth. Be realistic. You can’t have everything, but there are certainly some items to remain firm on.

Be sure to have adequate on-hand legal and accounting advice. Review any written documents before signing. If the fine print doesn’t meet your criteria and expectations, negotiate, or walk away. It is invaluable to locate the right property, and perhaps even more so to buy it under the right conditions, on your terms.

 

Insurance And Risk Management that Real Estate Investors Must Know

The real estate investment market has seen considerable growth in the recent past. The price of homes is on the rise, and relaxation of many demands and regulations on investors has stirred significant interest from many new economic groups. Lenders have lowered credit score requirements, and waived some previously standard documentation.

For these and other reasons, newcomers have flocked in record numbers to this game. None of this, however, will guarantee a profit on your investment. As you increase the dollar amount of your investment, so do you also increase the associated risk.

It would be wise to become familiar with a few different forms of insurance available to real estate investors.

Title and liability insurance are among the most common. Title insurance is designed to protect against issues that arise over the legal transfer of title from seller to buyer. A title company will search necessary databases to ensure that the property is free associated burdens, so that it may legally change hands. This type of insurance will cover potential economic loss as a result of these and other paperwork, filing, and tax issues.

Liability insurance protects a property owner against injuries incurred on or as a result of using the property. The insurance does not cover the property owner, but rather it was designed for injuries sustained by a third party. So when the door-to-door vacuum salesman slips on his way up your walk, you can rest easy, because your liability insurance will cover his medical bills and any resulting settlement lawsuit.

There are many other forms of insurance, which have been designed to cover any number of possible mishaps. Hazard insurance, for example, will cover damage resulting from earthquakes, tornadoes, hurricanes, flooding, fire (natural), and dozens of other factors beyond human control.

You can buy insurance for chemical spills, fire (from, say, a candle), electrical failures, vandalism or theft, faulty plumbing or wiring, and so forth. There’s even a policy designed specifically to cover large appliance failure.

Landlords may purchase insurance to cover lapses in rent payment, tenant-related damage to the property, and abandonment.

If you finance your property with a loan, the lender will likely require that you purchase mortgage insurance, which pays out to a lender (not you) in the event of default or disaster.

The price of insurance varies according to the degree of coverage desired, and the associated deductible. Read the policies carefully, noting any fine-print issues which may be used later to deny coverage. There is no law requiring that you use a specific insurance company, so do your research first. Shop around, and look for the greatest coverage at the least out-of-pocket expense. Find the policy that is best-suited to your particular needs.

 

Real Estate Investment Strategies

There are two ways to profit from a real estate investment: short-term and long-term. There has been an incredible surge in the number of short-term property investments in the United States, in part because of the speed at which it is possible to produce relatively large profits. Long-term property ownership benefits include tax incentives, and the associated rise in market value of assets. A long-term investment is obviously slower-moving, and consequently there are fewer risks involved, less chance of making a mistake, etc. But a quick profit is tempting, and will sometimes outweigh the hassles of long-term property management.

In order to figure out which method is best for you, calculate the total cost of your investment, and compare that figure with possible tax savings. Some things to consider: monthly payments, interest charges, property taxes, insurance, repairs, and general maintenance.

You may also wish to rent part or all of the property, in order to produce income for repairs, etc. ‘Good’ tenants will help relieve some of your financial stress, but remember that tenants can be a hassle — to find, keep, and maintain. And if your property is occupied, it will become difficult to perform necessary repairs, etc. It will inevitably take much longer to sell the property.

Foreclosed homes can be a great investment, but they often require a significant amount of cash upfront. And these properties are generally in need of some repair. Put aside some extra cash for restoration, especially if you’re not skilled in the necessary trades. Contractors can be expensive.

Similarly, there is money to be made from abandoned properties, although unlike foreclosures, purchase of an abandoned property generally requires a great deal of legal procedures. In order to find out who owns the title, you may need to spend some time and money.

If you’re weary of laying down significant sums of time and money, you might be interested in paper-based real estate investment, which is similar to stock market investment. There are a variety of ways through which you can invest in properties without actually worrying too much over titles, paperwork, and the physical needs of the property. Before investing in these types of ‘non-property”options, though, speak with a trusted broker.

 

Property Management

Should you buy something that you can live in, something you can develop and sell on, or should you buy a designated rental property? If you are going to choose the last option then you need to do your homework first. There are different types of tenancies and every one of them should be handled differently. If you do decide to opt for rental property investment then check out the property investment forum to find out more. It may be more complicated than you think. So before you make your final bid, or put your money on the table, you should ask where there is a tenant in the house.

Some properties that are sold at auction already have sitting tenants. Real estate property management is not for the beginner. To begin with you would need a substantial sum of money behind you if you have set your mind on rental property investment. Then, if you still think you are up for real estate property management you need to do your homework. The property investment forum will give you some insight on what you need to know. For a start rental property investment is not the same as other investments, real estate property management can be a big headache for the uninitiated. The market changes from day to day so what works for one person at a certain point may not work for you at another. You should make sure that your finances are such that they can support you through a period when property market prices go down rather than up.

So you take the plunge and you’re now in the business of real estate property management. You need to make sure that you’ve done your cash flow forecasts because you have to have sufficient funds for property maintenance. Landlords who don’t carry out proper maintenance not only upset their tenants, they could fall foul of the law and find themselves in a worse financial position. Rental property investment may be a good proposition if the place is empty when you buy it because sitting tenants may have a regulated tenancy which means that you could find yourself getting less than the market rental rate. This where the property investment forum can be really helpful because it gives a breakdown of the different types of tenancies.

Sometimes people are anxious to make money in property development but are not fully prepared for all the hard work that needs doing or the problems they may encounter. You shouldn’t be too quick to give up the day job. As this article has already pointed out the property investment market is not static and unless you have some money to fall back on you could find yourself in a lot of trouble. When it comes to rental property, as contributors to the property investment forum point out, if the property has sitting tenants then you will not make the money you might have anticipated. You may see tenants as your bread and butter but sometimes they are more of an expense than an investment.

 

Buy Real Estate with No Money Down

There is at least one technique that virtually anyone can use as long as the property seller is willing to negotiate with you. To be fair, not every seller will be interested (or even understand) the concept outlined. Your best bet is to find a property that the owner has great interest in selling, whether because of moving, divorce or frustration with tenants.

In fact, if you are currently renting and thinking about using this technique perhaps your landlord would be happy to help you out!

HOW TO BUY WITH NO MONEY DOWN

There are a few variations that can be used depending on you and your seller. Do they want the market price or are they just eager to get out from the monthly payments – perhaps facing foreclosure?

The simplest method is to take over their mortgage payments – called ‘assuming’ the mortgage. You will need to be approved by the original lender to assume the mortgage. If you cannot get approved for an assumable mortgage you may also try a ‘subject to’ assumption where you merely make payments while the property remains in the seller’s name.

WHAT IF THEY WANT A HIGHER PRICE?

You take over the original mortgage AND create a second mortgage on the remaining cost of the house with the seller. Offer a high, interest-only payment for a short period of time – 2 or 3 years. Instead of having the money sit in a bank they can be collecting a high interest over 2 or 3 years with the remainder due in full at the end of the term.

When the term ends you should be able to refinance the cost, or you can sell. Unless you hit a real bad market the value of the property should have risen in that time.

Just A Quick Sidenote: Isn’t this information really helpful? I don’t know about you, but I have always been curious about this type of thing! It is really hard to find top quality information about it, so I decided to share a part of what I have learned about this … keep reading!

WHAT IF THERE’S NO MORTGAGE TO ASSUME?

Easy. Most mortgage lenders merely want to make a good investment. While your local bank may still shy away there are plenty of financial lenders that would love to make a deal.

Financiers like real estate. The mortgage is usually based on 60-70% of the VALUE of the property, so as long as they know they get their money back in the value of the property if you default, they don’t care what kind of money you make. Complete the deal with a second mortgage created with the seller. If you default they can still foreclose on the property and sell it, paying off the existing mortgage with the proceeds.

As you can see, it can be in the favor of a buyer and seller to work together – especially if the seller is motivated. If they can’t wait for a sale, you can still give them their asking price with a little flexibility on their part.

 

Preconstruction Investment Real Estate Rules

1. Read Small Print – Before investing in a development, be sure not to fall victim to the curse of the small print. Avoid ending up the subject of those horror stories about real estate investors who are suckered into scandalous contracts with real estate developers. Some real estate developers will not let you sell the property until years after it is finished and others will charge huge penalties if the property is sold early. Always, have an attorney look at every contract before you sign anything.

2. Find a Preconstruction Brokerage – Unless you are VERY well connected in the area’s preconstruction market, it’s a good idea to go through a real estate brokerage that specializes in preconstruction real estate developments. There are several reasons why using a quality brokerage can help you, but most importantly, they know the developers and can discern between which can ensure quality and which are “accident prone”.

3. Research the Developer’s Past Projects – If the developer has had huge delays in past preconstruction projects, it will probably happen in the next several projects. Remember that your time is money – even if you get your full deposit back 2 years later, because of constant delays you may lose hundreds of thousands of dollars worth of wasted time and resources.

***Note*** As real estate developers have learned that the word “preconstruction” alone can sell out a project, they have created a new trend in the industry by labeling every phase of the project a “preconstruction phase.” Often these are low-quality condo conversions or condotels that are not worth half the asking price. BE SURE you are buying in the actual preconstruction phase before purchasing!!!

Just remember, the bigger the preconstruction real estate market gets, the more you have to watch out for fly-by-night developers and unethical brokerages that don’t have your best interests in mind.

 

Success in Real Estate Investing Tips

Real estate investing is always good and sometimes it’s red hot. When it’s hot dozens of real estate seminars begin rolling across the country and thousands of people spend thousands of dollars for investing education.

It’s startling to learn that of all those thousands of eager folks who attend these seminars only about 5% buy even one investment house. Why? The real estate gurus sell the “sizzle” and make profiting from real estate sound easy. The truth is that it’s simple, but not easy.

Here’s a quick plan that will enable anyone to begin building financial independence.

There are basically four steps to investing in single family homes:

1. Buy homes below full market value. Yes, people really do sell homes for less than the home’s full value. The key is to understand that most home owners will only consider a purchase offer that is all cash and within 5% to 10% of their asking price.

The successful investor learns to find financially distressed home owners who have no choice but to sell for less than market value. They have lost their job or been suddenly transferred; they are divorcing; they been living beyond their income; the family has been overwhelmed with medical bills and, not uncommonly these days, their money has gone to support a drug habit.

Those are examples of motivated sellers. They have to sell and they will accept something other than a conventional, all cash offer.

2. How do you find motivated sellers? You work at it! Like any business it is important to develop a little marketing plan. One that is simple, yet very effective, is the one that was proven 75 years ago by the Fuller Brush company; door to door sales.

You are selling your skill as a home buyer to people who must sell. Your are there when they need you and you have the skill to help them solve at least part of their problem. With door to door prospecting you will learn more and buy more homes quicker than any other method. However, most people just won’t walk door to door for three or four hours per week. OK, there are other ways.

You can watch public notices for the announcement of foreclosure sales. Meeting with a home owner right after they’ve received a notice that they are about to lose their home allows you to deal with a very motivated seller. Other public notices that provide buying opportunities include probate, divorce and bankruptcy. You can follow the Homes For Sale listings in your local newspaper or Internet site.

You can telephone the names found in these notices or, and this is the least time consuming, send a postcard expressing your interest in buying their property. It will produce buying opportunities, just not as many as personal contact.

3. After you’ve found a motivated seller you must understand how to frame offers that provide benefits for both you and for the home owner. A good real estate investor quickly learns that this is not a business of stealing property, but of solving problems in a way that benefits the seller.

The home owner is in a tight spot of some kind and you can save them from public embarrassment and, in most cases, give them at least a little cash to get a new start.

No investor can afford to leave cash in every deal. No one but Bill Gates has that much available money. You must use creative techniques like, leases, option and taking over mortgage payments. Little or no cash is needed for those deals. You can find plenty of reasonable priced educational material on those subjects in book stores or on EBay. The same education that seminars sell for thousands of dollars.

4. You make your profit when you buy! Never make a purchase until you’ve carefully determined exactly how you will get to your profit. If you hold it as a long term investment will the monthly rental income more than cover the monthly mortgage payment? Will you sell the deal to another investor for fast cash? Will you do some fix-up and sell the property for full value? Will you quickly trade it for a more desirable property? Have a plan before you buy.

There you have four steps that even a part-time investor can execute in three to four hours per week. What’s the missing ingredient? Your determination and perseverance. If you will unfailingly follow the plan for a few months you will be well on your way to financial independence.

 

Types of Investments in Residential Investments

Self Occupied.

A self occupied property generally yields returns after you sell it. The returns depend upon various property escalation factors like when you bought the property, when you sell it, what is the market rate is, the scope for development of the area and others. You don’t get dividends from this, but the net profit through selling after some time would be great.

To Be Leased Out

When you lease out, the returns typically vary from 5% – 7% annually only on the basis of rent received per year. The property escalation factors play a vital role here also. With a lot of multinational companies, foreigners, banks etc in the market it is very easy to buy an apartment and lease the same out.

Usually in residential property investment, the strategy is to buy the property in the suburbs, rather than the expensive urban area, and in due course of time sell it when the rate increases. There are a lot of property escalation factors like commercial development of that area, migration of a large number of people due to overly crowded city areas, industrial expansion, accessibility through transportation, availability of essential services like hospitals nearby and others which could increase the rate of your residential property. So, it is always a wise option to invest judiciously in residential property.