Purchasing investment property discreetly is perhaps a surefire way to build wealth in the long run. Since stock markets are too volatile, the investor is anxious and often seeks refuge in real estate, which unequivocally implies less uncertainty than other investment options. While the real estate industry has fallen somewhat since its peak in the late 1980s, shrewd real estate investments can still yield significant returns. In general, buying investment property gives you access to three benefits: yield, capital growth, and tax advantage through negative leverage.
Investment properties are also known as non-owner-occupied properties. Since all investors are looking for high capital growth, it makes sense to buy an investment property in a developing area. Experienced investors claim that suburbs located within a 10 km radius of a city center can be considered development areas. It is recommended that you explore the area before purchasing an investment property. Make sure basic services and emergency supplies are easily accessible to potential tenants. This would result in healthy rental returns and minimal vacancy periods, if any.
When buying an investment property, you should keep in mind that renting an apartment is much easier than renting a separate house. In addition, the costs of rectifying problems, such as replacing the heating ducts, are shared between the different owners of the apartment.
The location also plays a crucial role in determining which property to buy. Panoramic view properties are often more desirable than others. Without a doubt, the rental income from such a property would be enormous. But there’s no point in going overboard and buying an expensive property, before making sure that potential tenants can afford to rent said property.
If capital growth is what you are looking for in an investment property, then look for a property that can sell quickly. Increased properties, such as a unit with a balcony, garage, or laundry room, are quite attractive and can be sold easily.
When purchasing an investment property with the primary intent to rent it out, you should be aware that there may be periods when the property is vacant, either due to repairs or a lack of tenants. Therefore, you must have a contingency plan for such vacancy periods.
Real estate investing may not seem like a complete success for the first few years. But after a few years of owning a property, you may find yourself shifting from a negative to a neutral or positive orientation. That is, their returns would be higher than their operating expenses. This is because rental income would gradually increase, keeping pace with market sentiment. Over time, you would also build additional equity in your investment property.
In general, buying investment property can be a profitable venture if done wisely.
Copyright © 2006 Joel Teo. All rights reserved. (You may republish this article in its entirety with the following author information with live links only.)
