Investing in stocks, bonds, shares, real estate are all ways that people can make a good profit. Of these, investment in realty is considered to be more stable than other forms of investment for the realty market does not fluctuate as dramatically as does the stock market. Here are the main advantages of investing in realty:
• Less risky
• Smaller starting capital is required
• Not time consuming
• Real estate appreciates
• Low inflation
• Tax exemptions are available
• High income can be generated
• High return on investment
• Demand will increase
Investing in realty is more stable and safer than investment in other areas like the stock market. This is due to socio-economic factors like market behavior, location, population density, property value appreciating over time and such. Knowing which place to buy a property is the key to making a profit in realty. For example, investing in a property in a good neighborhood with a lot of resources and low mortgage rates will make the property appreciate in the future thereby giving a good profit to the owner when he sells.
Real estate can be purchased with minimal capital for there is the advantage of taking a home mortgage using the property as collateral. All that is needed is the initial down payment amount that could be as little as 10% of the property value. With a good credit history, steady salary and not too many outstanding loans, an investor can comfortably repay the mortgage loan. This is also called real estate leverage, which means investing a small part and borrowing the remainder from banks or other lending institutions.
The same property can be used to get refinance amount that can be used to repay the mortgage amount sooner or when the owner decides to sell the property, he can easily repay any outstanding mortgage amount. Once you get into realty investments and find it profitable, you can easily start branching out by buying more and more properties, refinancing the previous property to purchase a new one and so on. Unlike some other investments, realty is not a time consuming one.
Invariably investment in realty is a long term venture. Hence, studying the market conditions, negotiating deals, managing and then selling off the property at the right time is important. You do not need to monitor the property on a daily basis. Even the ones that are rented out only require periodic maintenance. Depending on the location of a property, the value will definitely appreciate in the long run. If the property is centrally located, in a good geographic area and a safe neighborhood, then it can even appreciate as much as 25%.
The inflation rate on realty is lower than other commodities. Many states offer tax exemptions for certain property investments. For example, a person can ward off depreciation of property as against his income or ward off the home expenses spent as against the principal amount of the property. Investment in realty helps generate a positive cash flow as long as it is managed properly for the value of the property will keep increasing. Even after taxes, investment in realty can generate a high return on investment.
Finally, a great advantage of investing in real estate is that the demand for property will always keep increasing. As population increases, land that is available for building will reduce. Existing property value will sky rocket especially if there is a clause in a state as to how much land can be actually developed. Shelter is one of the main necessities of mankind along with food and clothing. Hence, real estate however small will always be in demand. Now that we have seen the many advantages of investing in realty, let us see how a home loan calculator can help get a good mortgage.
A home loan calculator is used by potential buyers of real estate to determine how much they can borrow on a property. Depending on the type of calculator that is used, you can get various figures like how much a borrower can afford to invest, costs, payment schedules, interest rates, changes in period of mortgage if certain additional payments are made and so on. This automated tool is available for free and helps the user establish the financial implications of the mortgage he plans to take.
