Property Investment For Beginners

If you are sitting on a pile of savings and searching for investment options with high returns, real estate investment is worth considering. This article is a short guide to property investment for beginners.
Traditionally, one of the best high return investment options has been investment of money in real estate. While the property prices may go up and down in the short term, over the long term, they have always appreciated substantially. The ownership of a piece of land is an investment you can eventually bank upon, as it acquires value through development of the areas in its vicinity. With the falling of property prices, many people will advise you to stay away from investing in real estate. However, if you look at it from a different perspective, you will see opportunity in this situation.

Properties which were once beyond your budget reach are suddenly within your range. For those of you who have been smart enough to save money throughout the past bearish decade, now is the time to invest and take advantage of the opportunity, which has presented itself. In this Buzzle article, I shall share some tips on real estate investment for those of you, who are smart enough to recognize the opportunity this recessionary background has presented.

Tips on Property Investment for Beginners

Any investment comes with its share of risks, which cannot be entirely eliminated but lessened through research and planning. Same goes with real estate investment. You have to do your homework and get your research right to end up on the winning side. Here are some tips for beginners.

Know about the Range of Real Estate Investment Options
Firstly, you need to begin with a study of the varied range of investment options in real estate, which you may consider. You may invest in buying residential houses, commercial properties, condos, apartments or purely specialize in land investment. There are a lot of options out there and you need to consider the entire range, to decide which would ideally suit your investment budget and align with your future plans.

Invest to Sell or Invest to Rent out Properties
There is the important decision of deciding whether you buy to rent or buy to sell again for a profit. The former option is open, if you buy residential properties. You can create a regular income source for yourself by investing in rental property.

Otherwise, you also have the option of entering the house flipping business, which is buying old houses, renovating them and selling them back again for profit. You may buy a piece of commercial property, hold it till the prices rise and sell it to make a substantial profit.

It’s All About Location
Remember when it comes to property investment, it’s all about location. The price of any real estate property is largely a function of location. The localities decide the price range and therefore you need to research the price trends according to location, before you make a purchase.

Research & Do the Math
Once you have decided on what kind of property you plan to buy, what purpose you intend to buy it for and are clear about the amount of money you are willing to spend, start researching real estate listings to find properties that fit the bill. Calculate the returns you plan to gain from the investment and the amount of mortgage loans you can afford to apply for.

Networking With Real Estate Agents
A real estate agent can make your job easier in finding properties that are exactly what you are looking for. Creating a good network of real estate agents who can point you towards good investment properties is essential. Real estate brokers can handle the legal affairs associated with purchase and sale of property for you. They can make an offer to owners on your behalf and negotiate on your behalf.

Making Financial Arrangements for the Investment
Once you have decided on the property and made an offer, you need to arrange for the money you plan to invest. A pooling up of your own savings and a mortgage loan if needed, can cover the total investment amount. Talk to financial institutions and mortgage brokers for financing options.

The key to making good investment decisions in real estate, lies in research. For a property, the location is the most important aspect of consideration and all other points come later. Good location, with access to resources in its vicinity, creates an opportunity for eventual growth of property value. With a pooling in of your own savings and a mortgage loan, you can buy strategically located properties and rent them to generate revenue, or sell them as the prices appreciate substantially. You can’t eliminate risk, but minimize it by putting your money into properties with high potential of price appreciation. Get a good real estate agent to advise you and a mortgage broker to assist you in the arrangement of finance.

Investing in Commercial Property

Buying commercial property as an investment can be a daunting task for the beginner, with several pitfalls. To enable a smart investment choice, some useful tips have been shared in this article.

In the aftermath of the real estate property market meltdown, people were naturally averse to taking risks, by investing in residential and commercial property. As a seasoned investor would advise you, in such bearish times, there are a lot of opportunities to take advantage of. With the real estate prices hitting rock bottom in recent times, many properties can be bought, at a fraction of the price they would have earned during boom time. While there is substantial amount of risk involved in buying commercial property, with proper research and wise choice, there’s profit to be made. At the outset, let me expound some of the advantages of investing in properties of the commercial kind.

Advantages of Investing in Commercial Property

Commercial properties primarily include office spaces, shops, storage warehouses, industrial spaces or any other piece of real estate that is leased out or used for commercial purposes. Location and space are two of the prime requirements of businesses and leasing a property is a much more affordable option for them, instead of buying it. This presents commercial property investors with an opportunity to make substantial profits.

One of the prime advantages of investing in commercial properties are the long leases and high rent that owners can earn. Compared to residential properties, commercial ones tend to maintained a lot more professionally, which automatically reduces expenses. The high percentage of return on investment, in excess of 8% to 9%, justifies commercial real estate investment.

Properties in prime locations can expect an annual hike of 3% to 4% in rent, which guarantees higher returns in the future. By handing over the maintenance and administration to a commercial property management firm, you can simplify your life and reap profits in the long term. Commercial property that are located in prime business zones are always in demand and hence you can expect a decent resale value in the future, when the prices in that locality appreciate substantially.

Commercial Property Investment Tips

You need to appreciate the prime importance of ‘Location’, when it comes to investing in commercial real estate. Businesses are looking for office, shop spaces, warehouses with all the necessary amenities and resources in their vicinity. So choosing a commercial space in the right location is the first important thing and it requires a substantial amount of market research to find such properties. You will have to network with real estate agents, who have a database of such properties on sale.

Decide on how much you are willing to invest, which will automatically limit your choices and help you focus on what kind of properties you can afford to invest in. Once you have shortlisted a few properties, determine the asking price and the projected returns through lease, after accounting the maintenance and taxation costs. If you are thinking of buying commercial property and plan to arrange for the investment corpus through a mortgage loan, do the math and determine the profits you will gain in the future after maintenance costs and loan installments. If the math shows you that the investment is a feasible one and you are guaranteed that your principal is safe with decent returns, go for it!

If you have a commercial space in a prime location, there is always going to be demand from businesses and the chances of your investment being highly profitable are higher. Work out the yearly maintenance costs for the property, research every aspect of the investment thoroughly before going ahead. Here’s me wishing you all the very best for your commercial property investment endeavors!

How to Buy Commercial Property With No Money Down

Buying real estate with no money down is a reality and many people are already doing it. Seller financing, rural development plans, and veteran affair loans can come to your rescue if you haven’t saved enough to make the initial payment.
About two decades ago, if you did not have 20% of the down payment for buying a property, not many banks would have entertained your mortgage application. But times and changed and how. Today a down payment of around 5% is good enough to buy a commercial property. But is a zero down payment realistic? The answer is yes, but it has its own baggage of certain terms and conditions. Read on to know more.

Seller Financing

Suppose, a property is evaluated at $100,000. You sit down with the bank officials to discuss the interest rates, repayment plans, foreclosure charges etc. The bank is willing to finance 90% of the total amount, leaving you with round about $10,000 as a down payment. What if you propose a second loan of $10,000 at a higher interest rate. If you have a decent credit rating and are willing to pay a little higher interest rate, the bank might finance your down payment, with you buying the property without paying a single dime as down payment. But, you have to keep in mind that every month you would be liable to pay monthly installments on both the loans, and it may take a huge chunk out of your salary. Also, personal loans charge the higher interest rates – roughly around 20%, and you will have to pay a lot extra than you would have taken.

Rural Development Plans

Another way of buying a commercial property is to apply with the USDA rural development plans. It provides you with 100% financing for your home purchases and one does not need to be a first time buyer to qualify. Some of the benefits of buying a home this way is that there is no cap on the purchase limit and you can include the repairs and improvements in your loan. The property that you want to buy should be in a qualifying area as per the USDA rural development guidelines.

Veteran Affairs Loans

Veteran affairs loans allow veterans to buy mortgages with no money down. One has to meet all the requirements set up by the United States Department of Veteran Affairs. People who are eligible for VA loans are veterans, active duty personnel, National Guard members and some surviving spouses. You need to have documented proofs to apply for a VA loan.

These were some options for you if you are thinking of buying a property with little or no initial payment. If you are eligible for a no down payment mortgage loan, should you go for it? You should definitely think about it, but before doing that, it is essential that you have a clarity on its disadvantages.

Disadvantages

If you do not pay anything up while buying a property, you are definitely going to pay higher mortgage rates and your monthly payments would also be higher.
When you buy a property with zero down-payment, you would not get all the choices to make, and you may need to make a few compromises.

The sub-prime crisis was a result of too many people taking mortgage loan and then defaulting on their payments. While a zero down-payment may work for people who are spending more money by paying rents etc., one should carefully think about all the pros and cons of a zero down-payment loan before taking one up. I hope this article would have helped you to know how to buy commercial property with no money down and its financial implications.