Felix07Richerd
New Member
There are many businessmen who are into real estate business cause they believe that money there is easy as long you know the right strategy on how to work on it.
There are good reasons why they choose to be in line on this business.
These are several facts:
1. Cash flow from property - This is the difference between your income and your expenses on that specific piece of property.
2. Appreciation in the value of a property - There are two kinds of appreciation, the external and internal. External appreciation has nothing to do with the actual property itself but comes from economic conditions,. Some people have made good deals by predicting where the next property hotspot will be and buying in hopes of quick appreciation – but of course, if you get it wrong, you are in trouble. Internal appreciation comes from improvement in the actual property itself and is easier for you to control. You can buy a piece of property in need of repair at its as is value, improve it and sell it on at a profit.
3. Leverage – being able to buy a piece of property by borrowing a percentage of its value. No other type of investment offers such a high degree of leverage. It is not unusual for investors to purchase a single family house by obtaining 100 percent financing – i.e. “no money down” real estate investing. This of course is very attractive if you can “flip” the property at a profit, quickly repay the loan and pocket the difference. But of course this can also be extremely risky. If the property doesn’t prove to be a good investment, you are in trouble. Never forget the loan is a loan and has to be repaid – somehow.
4. Amortizing - You have bought the property with other people’s money, but as you repay, your principal is being reduced. That means your equity – your level of ownership of the property - is being increased.
5. Tax advantages - There are several ways in which property ownership can be used for legitimate tax avoidance – though this should not be your first and foremost reason for buying the property, more a side benefit.
There are good reasons why they choose to be in line on this business.
These are several facts:
1. Cash flow from property - This is the difference between your income and your expenses on that specific piece of property.
2. Appreciation in the value of a property - There are two kinds of appreciation, the external and internal. External appreciation has nothing to do with the actual property itself but comes from economic conditions,. Some people have made good deals by predicting where the next property hotspot will be and buying in hopes of quick appreciation – but of course, if you get it wrong, you are in trouble. Internal appreciation comes from improvement in the actual property itself and is easier for you to control. You can buy a piece of property in need of repair at its as is value, improve it and sell it on at a profit.
3. Leverage – being able to buy a piece of property by borrowing a percentage of its value. No other type of investment offers such a high degree of leverage. It is not unusual for investors to purchase a single family house by obtaining 100 percent financing – i.e. “no money down” real estate investing. This of course is very attractive if you can “flip” the property at a profit, quickly repay the loan and pocket the difference. But of course this can also be extremely risky. If the property doesn’t prove to be a good investment, you are in trouble. Never forget the loan is a loan and has to be repaid – somehow.
4. Amortizing - You have bought the property with other people’s money, but as you repay, your principal is being reduced. That means your equity – your level of ownership of the property - is being increased.
5. Tax advantages - There are several ways in which property ownership can be used for legitimate tax avoidance – though this should not be your first and foremost reason for buying the property, more a side benefit.