Real Estate Investment Is The Way To Go

By: Vince J. Paxton

A study reveals that 23% of the homes sold in 2004 were all bought in forms of investments. When the historical returns and the increase in the high rate of prices for the past few years are considered, it does not surprise us. There are many ways of making profit from investment into property.

One such way is 'flipping' by which we buy a property and sell it for a quick profit. One can also keep it for a longer time to reap the benefits of tax incentives and capital appreciation. The total cost should be calculated in accordance with the amount saved by writing off the tax-savings. The interest charges, property tax, repairs, insurance should also be included with the monthly amount.

It should be remembered that the value of property has risen to a large extent in the past few years. But with the correspondent rise in the rate of interest no one can foresee how high will the price go or when will it go. But no gain without risk!

Other than profits from appreciation or tax write off, some of the costs can be offset by way of renting the property. Now consider the time and cost involved in finding a tenant, manage the property and also costs of repairs on the same.

Another avenue of investment is foreclosure. It also involves quite as much of risk and often require cash outlay. When a property holder is unable to pay any more payments on a mortgage for few consecutive months then it is said to have gone into foreclosure. But foreclosed properties are rarely an all-profit affair.

Foreclosed properties require repairs since generally people with a mind to do away with it wholly never looks forward to its condition. You should prepare to bring it back into a salable condition either through a contractor or by your own means.

Such conditions also apply to investment in abandoned property with some additional legal disputes to settle. Foreclosed property generally has clear titles when the lender who may be a bank, or a mortgage company or other finance-provider reclaims the title as a part of the foreclosure process. But it's never clear who holds the title to an abandoned property. This requires a lot of expenditure to find out the details.

Those who aspire to make a profit through real-estate dealings, without actually laying out an amount or signing a number of documents or even worrying about the physical condition of the properties, there are systems of investment on papers. With the widespread computerization and the expansion of investment modes since the 1980s several kinds of 'monetization' of real-estate have come into being. REITs or the Real Estate Investment Trusts are one such thing. Mortgage backed securities, trusts, property bonds, mutual funds and real-estate oriented stocks are other such avenues to name some more. But before investments into any of these it is advisable to consult with a broker.

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