Real Estate Beginner's Tips Why should you invest in real estate? Well, why not? Investing in property is a highly profitable and promising undertaking. It can be a reliable source of income, and property values increase as the years progress, as real estate values generally have an upward trend – this is called “appreciation”. This ensures you of an increase in income later on, which may mean more investment capital. You can even increase the value of a property quickly when you invest in improvements before you resell them, or rent them out – this is referred to as “sweat equity” in real estate jargon. Something to avoid, though, when investing in your first property for this venture is to borrow money. Incurring a debt before generating your income will slash the latter down a great deal once you start getting it, since a lot of it will go to debt payments. You would rather save up first to get the most out of incoming money. If you plan to invest in real estate rentals, another benefit is that paying off the mortgage need not come from your own pocket, but from the rent that tenants pay. People refer to this as OPM or “Other People’s Money.” Also, with rentals, you are assured of a fixed monthly cash flow coming in; and with rents naturally increasing over time, you can be assured of savings, and even retirement funds. Foreclosed property is a jackpot mine for any investor – many foreclosed properties can be bought at prices lower than the going market values, so with minimal investment you can possibly earn at least twice that amount. There are listings available for foreclosed property. Keep tax deductions in mind – this is yet another benefit to investing in property. A lot of business deductions come with investing in property because essentially, it is still a business. In addition, other tax perks include deductions in meals, lodging and travel when visiting your property. Check with local tax experts into further details regarding deductions. Here’s an additional tip: avoid making improvements before the tax assessor arrives. Changing the countertop or increasing curb appeal (which is the outside aesthetic of your property) may increase your property tax, so until the assessment is done, hold those investments on property improvements. Improvements however, will attract potential tenants or buyers of your property so when you start selling or advertising, make sure everything is clean, de-cluttered and functional, furnished just enough to allow interested customers to be able to imagine themselves residing there. Insurance is yet one more important factor you do not want to overlook. Make sure you have insurance that can cover for your property in cases of, say, calamities, as it can save you huge chunks of money. Not only should you check everything that’s on your property, check the neighboring areas as well. Outside factors that influence the price of your property or the rent that you will charge, as well as the kind of buyers or tenants you will attract include accessible roads, quality and distance of the nearest school, and crime rates. Where your property lies can be as important as your property itself.
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