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Property Investment

Property investment refers to real estate which is purchased for the purpose of making money. Investors can buy all types of properties such as residential homes, commercial real estate, or vacant land. When homeowners buy a house they are also making an investment. As the property value increases, homeowners accrue home equity which can be borrowed against.

The type of property investment will depend on the needs of the investor. Investors who buy homes can use the property to generate rental income, for house flipping, or to offer with owner-financing such as seller carry back mortgages or lease purchase agreements

As more property owners lose their home to foreclosure the need for rental homes will increase. Investors can capitalize on this niche by offering affordable homes for rent. Since foreclosed property owners cannot qualify for another home loan for several years, offering creative finance strategies can boost cash flow.

Providing owner will carry options allow individuals with bad credit the opportunity to buy a house while restoring their credit. Owner financing contracts generally extend for 2 to 5 years. Afterward, buyers are required to obtain bank financing to purchase the real estate.

Residential properties can also be used as vacation rentals. When real estate investors buy houses in popular tourist destinations they can often earn a better return on investment than offering long-term rental homes. However, investors should be financially capable of offering the property fully furnished and include linens, cookware, microwave, TV, and other common comforts of home.

Buying houses for the purpose of house flipping has become an investment practice that isn't nearly as popular as it used to be. Prior to the economic recession, many investors purchased distressed properties at deeply discounted prices, fixed them up, and sold them for profit.

Selling houses quickly has become a thing of the past, as most properties are listed for months before finding a qualified buyer. There are still instances when house flipping can yield profits, but this niche is best for experienced investors with a solid network of buyers.

Commercial real estate has the potential to generate large profits, but can also generate enormous losses. Investors who specialize in commercial properties generally partner with a group of investors to minimize costs and management duties.

Investing in commercial real estate requires investors to abide by state and federal laws. When investors buy apartment, condominium, or office buildings they must comply with regulations set forth by the Americans with Disabilities Act and be in compliance with state zoning laws.

Commercial properties require a substantially higher cash investment than residential real estate. Investors must be financially capable of paying utilities, property taxes, and wages for employees to maintain the property.

Investing in vacant land can yield a good return on investment or could lead investors to the poor house. As with any property investment, location is the key to success. When buying vacant land, investors must take time to determine the need for that land parcel by researching growth trends.

Vacant land can also be leased for purposes such as ranching or farming. Leasing land can be a profitable venture that does not require much hands-on attention. However, investors must comply with state and local regulations.

We invite you to learn more about earning profits through property investments. Our real estate investing article library encompasses a variety of topics including buying foreclosure and bank owned property, engaging in creative financing options, and earning profit from commercial real estate investments. New articles are published weekly, so take a moment to subscribe to our mailing list to stay abreast of current market trends.


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Published on November 08, 2010 at 02:12 AM | Comments: 1

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Comments

I found it interesting what you said about the rental market heating up as the number of foreclosures increases.

My personal experience here in Salt Lake City, UT, is that the rental market seems pretty soft.

I had wondered if this might be related to the region, the type of properties I rent, a nationwide trend, or what exactly.

Logically, it makes sense for the rental market to go up as more people lose their homes. Now you have me wondering if there is any research out there that indicates that, in fact, the rental market is heating up.

Jonathan Wood | November 19, 2010 9:42 AM

 

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