Property ownership is perhaps one of the most intelligent investments anyone can ever come up with. Each time you talk to someone about buying properties, the goal of increasing profit and becoming substantially richer through the value of the asset they invested money in will often be brought up. However, the truth is this only happens if and when a so-called investor knows what to do after buying the property.
With almost every other person’s fixation on getting richer, the idea of buying properties is not so bad. However, if one plans on merely living in it with their family, it will only be a proof of their hard work, and not an investment. When we talk about investment, it is something that has an increasing potential to give someone more money. Consequentially, one has to make plans about the property following its purchase.
Basic information and a few other details essential to generate income through property buying is what they need to begin with. Truth is real estate investments can give you an increasing flow of income through three basic ways:
1. Leveraging on equity – Buying a piece of property increases your net worth as an individual. It means that your “portfolio income” is now worth more than just your annual salary because you now have an asset under your name. And when the value of the property increases through time due to vital factors like commercialisation of the area where it is located, it definitely increases your net worth, too. However, since this is just “income on paper” and the wealth is not as tangible as you think, leveraging on the value of the property will do the work for you.
You can make this happen through using the property as collateral so you can secure a loan to start your own business.
If you happen to be a more savvy property investor, you may just as well finance that same property (given a higher value this time), get some cash out, and purchase another one that has a potential to increase your income yet again.
2. Selling the property – This may be a little tricky especially for first time investors. Some would think that buying a property, waiting for its value to get higher, and eventually selling it would be the best way to get rich. This is just so wrong. As a cleverer investor, you’d be better purchasing one that has a lower market value and selling it at a higher price that is still below its market worth. For instance, you can buy a property foreclosed by the bank that is being sold at 60% beyond its market value and sell it after a few weeks at 20% higher than what you bought it for.
Moreover, you can buy an existing property and do some renovation to sell it at a higher price.
3. Renting it out – If you prefer a regular cash flow out of your property, you may choose to rent it out. As this is not as easy as it seems, just remember that everyone needs a place to stay in, especially those that moved in from their cities to yours for work. When considering buying a property to rent out, you need to remember that real estate is all about location, location, and location.
Additionally, you also need to properly screen your tenants to make sure that none of them are problematic non-payers or one that often starts trouble in the area. You will also have to consider how you maintain and manage your property so you can rent it out at the value that you believe it is worth.
On a general perspective, getting a bit wealthier than your current financial state is not just a rich man’s thing. An average person, given the right amount of knowledge and the proper planning can increase their income and eventually become richer through property buying. One must also need to have their objectives clearly defined so they can create an effective plan on how to achieve it.