Tuesday, 17 August 2010

Different Investment methods in real estate

Investing in real estate is one of the most traditional forms of investment. Real estate investment is a good option of investment because the value of real estate going upwards only and never come back and also the cost increases every moment. One of the main reasons is that the demand of real estate increasing day by day and has no enough supply to meet the increasing demand. So the investment in real estate also becomes popular day by day. Investing in real estate is not so easy and the money we should invest in is more than that of stock or other investments. So one should be more careful when invest in real estates. In this situation let us see some important methods of investing in real estate.

Investment in property for renting it out. This is one of the traditional methods of investing in real estate. Buy a property and renting out it and make profit out of rent we could collect from the tenant. This may be residential property or commercials property. The land Lord can earn money for the repayment of loan taken for the property and to pay maintenance charges such as repair, taxes and other charges and the balance amount can consider as profit. The value of property always increasing and he will get an appreciated value when he wishes to sell it off. After paying off the mortgage he can harvest more profit because he should not pay the mortgage installments. But he has to take care of the maintenance and sometimes the tenants may be bad tenants and may damage the property etc. In such cases it will be a disturbance for the landlord and he has to suffer these problems. He has to be vigilant to purchase property in high demand area, unless he may face problem to get tenants. Even if there are problems this method of investment is a good option so that the owner can earn rent and also the appreciation of his capital invested in.

Real estate investment group. This is the another form of investment in real estate that if you do not wish to bear all problems of a land lord you can join with this group and they will take care of all these matters collectively and you can take rest and can accept rent as an income. This may be a company or such group those who buy or construct a block of apartments of building and resale it to the investors and they will continue to take care of all repair, maintenance and letting out the property. The owner should not bear any such problem and they will advertise when the building is empty and all. But they would charge a percentage of rent every month. Even though it is a better option for the property owner, before joining such group check all operation and charges of the group in detail. Some of them may charge a high amount and may create any problems etc.

Trading with real estate. This type of investment is just buying the real estate, hold it for a short period and sell it off with a high price. This is like stock trading, making profit from buying and selling of real estate. This type of investors does not spend for maintaining the real estate. There motive is to make maximum profit out of the resale. But some of them renovate the property and sell it with a high value. Some big investors reconstruct the property with many floors and sell all the floors and make a huge profit. Only thing is that you should choose a property which can fetch high value when it is sold.

Real Estate Investment Trust (REIT). Wall Street turns real estate into a publicly traded instrument. This trust uses investors’ money to purchase and operate income properties. They buy and sell major exchanges like stock and they must pay out 90% of their profit as dividend and it is helpful to reduce their tax liability also. They handle non residential properties like malls and office buildings and the investor can invest in such highly liquid investment.

According to your tastes and preference you can invest in real-estate in any of the above methods, but learn thoroughly about the particular type of investment you wish to invest.

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