Planning to invest in real estate? All set to purchase property for yourself, family or for investment purposes? If your answer is ‘yes,’ won’t it be great to earn money on your investment regularly and also look forward to earning profits on rising property values in the future? If you invest sensibly and with a little bit of tact, cash flow from property investment is yours for the keeping!
There is always a chance of being in a no profit – no loss situation, or even losing money on investments regularly. So, your plans of making a big buck, foreseeing rise in property values may backfire. An ideal situation would be when the property which you have invested in, keeps the cash flowing in regularly.
Here are some useful tips to invest sensibly and with an assured profit:
Your home should be your first investment, i.e., if you are not the owner of your own home yet. As a primary residence, interest rates and down payments tend to be on the lower side. Since this will be your ‘sweet home’, the question of dealing with tenants does not arise in this situation.
Less expensive homes should be your target when investing in “official property.” Small houses are easier to be given on lease, and can rake in more profits than large houses. Large houses cost more, are more difficult to rent out and what more – it may be viable to buy two or more small houses for the price of one large house! This is a sure bet of increasing your profits.
Choose the best loan option. A “payment option” loan is one with a very low interest rate in the initial years. Optional minimum payments are allowed in this scheme, which can result in low monthly payments, initially. During the minimum payment period, your minimum payment increases by a small amount every year; only by a minimal factor of 1.075. The interest will still continue to accrue at whatever rate you have agreed on, but the interest that your payments don’t cover will be deferred. At the end of the first five years, that deferred interest is then added on to the loan, and the loan becomes a standard variable rate loan. No call for worry, since the property’s value will have appreciated enough to cover the deferred interest.
A second option to minimize monthly interest payment is to avail interest-only loans, with repayment periods of 5 – 10 years. You will be paying only the interest on the loan during this period. To achieve optimal use of this scheme, sell off or refinance the property invested in, by the end of the loan period.
Financial options available differ with respect to different areas. Assure that you capitalize on them to achieve a positive cash flow on your investment property. Again, if you are set on leading life as a successful real estate investor, ensure that your investment properties pay for themselves.
- Real Estate Investment Research
- Financing Real Estate Investments
- The Perfect Real Estate Investment?
- Real Estate Investment Expert