Investing in Real Estate
Now that the real estate recovery is underway, investors are returning to the market in a big way. While it is easiest for larger corporations and trusts to take advantage of foreclosed properties, falling prices, and low interest rates, a savvy individual can still find ways to invest in real estate.
The main reason someone buys investment property is to make money on leasing it to a tenant. While some people prefer to invest in residential houses and condos, others find that purchasing retail or office space and then leasing it to business owners is safer than being a landlord to individuals and families.
Before purchasing a property for investment, buyers need to do their research. They need to know their own financial situation and the real estate market in their area. Investors need to look at property values, insurance and crime rates, neighborhood amenities such as schools, hospitals, and parks. They also need to familiarize themselves with legal and tax requirements associated with such a purchase.
The costs associated with maintaining a investment property can be prohibitive. Landlords must make mortgage payments and pay property taxes, maintain insurance premiums and pay for any repairs or maintenance required on the property. They may need to have liability insurance for their tenants and pay taxes on the income from the property. In addition, if the tenants vacate, they have to spend time and money advertising for new tenants and still cover the costs of the property while it is empty. Tenants can also cause financial and legal problems up to and including the need to initiate eviction proceedings, which are time consuming as well as costly.
Investors can get around these problems by choosing to hire a property manager or management firm. In those cases all they have to do is choose a reputable manager and pay them to handle the property and tenants. The owner still retains legal and financial responsibility, but they don’t have the daily stress of managing their investment.
Other Investment Properties
Renting out a property is not the only way to invest in real estate. Some people choose to join investment groups that purchase, manage, and sell property. They may or may not have a vote in which properties are purchased and how they are managed or they may simply invest as if buying stock in a company. Other types of real estate investment include time shares, which entitle owners to limited use of a property, purchasing land to be developed or sold in the future, or buying property to be improved and sold at a profit, known as flipping.
by Howard Sellers, a financial writer who provides guest posts on subjects like the financial worth of athletes as well as offering money management tips for couples and families.