Why is it so important to INVEST in REAL ESTATE?
Why is it so important to INVEST in REAL ESTATE
?
As a smart investor we can not deny the importance of investment in real estate. There are many ways to invest in real estate. But we should not forget that investment in real estate is not so easy as it seems. Real estate as an investment plays a very important role and it may also give us huge appreciation over a period of the which is very important to create a wealth in any individual portfolio. We at sapphire broking & events helps you to invest in different ways as follows
1. Appreciation of the Market Value of Properties
This is the most widely known way of profiting in real estate. A property is purchased and held. Over time, the value of the property appreciates, sometimes even faster than the overall market. Certain areas of the country have experienced significant appreciation in home values over the last ten years.
2. Real Estate Stocks and Mortgage Instruments
The passive investor would likely want to place investment funds into the stock market in the form of equities of major national homebuilders. Or they might invest in a Real Estate Investment Trust (REIT). This is a fund set up and managed to invest in stocks, bonds and mortgage instruments in the real estate area.
Discounted notes are another investment strategy. Sellers many times accept a mortgage from a buyer, and after payments have been made for a while, they want to convert to cash. They sell the note to an investor at a discount and the investor then gets payments from the buyer.
3. Regular price inflation in the economy.
Even if home values aren't appreciating in a given area due to demand, their value can still increase significantly over time just due to economic inflation. If the cost of labor and materials to build a home are rising, then the construction of an identical property would be more costly. Thus the property's value is higher just because of recreation costs.
4. Buying below market value.
For a variety of reasons, there are always property sellers that have an immediate need to get their equity out of the property. This need can be pressing enough that they'll let the property go at a price significantly below its true market value. Some properties are in foreclosure and the lenders will take less than the market value in order to avoid further marketing expense and clear their books. When you can purchase one of these properties, you immediately enter an equity position that is your profit in the transaction.
5. Cash flows and Mortgage Payoff
Purchasing rental properties and keeping tenants in them results in cash flow in the form of rent payments. This can generally provide better returns than bank interest or stock appreciation.
Even if your rents on a property are only making the mortgage payments and no more, you are increasing your equity along the way. At some point the rents will totally satisfy the mortgage balance, and you'll own the property free and clear.
6. You can increase value in the site and/or the property.
An example of both of site and property value increases might be a home in an area with great mountain views. However, this home is older and has small windows facing the views. In addition, some large trees are directly in the views, and there's no outdoor enjoyment areas on that side of the home. You purchase the property and do three things:
a. Site Value - You remove one tree and trim the others to open up the view.
b. Site Value/Property Value - You add a patio and deck on the side of the home facing the views.
c. Property Value - You add larger windows in the home facing the view.
7. You can convert the use of the property.
A classic example of this would be the purchase of apartments with low rent yields, remodeling the structure and converting the apartments to condominiums for sale.
8. Create new value in the neighborhood.
Getting into an area early when it's beginning to gentrify can be quite profitable. All around the country, urban neighborhoods are experiencing renewal. Older properties are being refurbished and values jump significantly.
Sapphire broking & events wish this information will help you invest in real estate in more effective manner and help you to create wealth through real estate.
SAPPHIRE BROKING & EVENTS
http://www.sapphirebroking.com
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