| |
| |
|
Real Estate Information |
|
|
Why Invest In Property?
Why property, some people ask when looking for an investment. Well, as far as I am concerned, property investment is, and always has been, the most powerful type of investment for building wealth. It has been said that over 90% of the world's millionaires got there by owning property. The reason property is such a powerful way to build wealth is due to one key concept: leverage. Once I realised this, I didn't look back. Now if you are an experienced investor this may be obvious, but for the benefit of those who haven't seen the light, let me explain ... Leverage is your ability to magnify your returns by using other peoples' money (in this case, it's usually the bank's money). To give a clear example, say you have £20,000 to invest. This can be a lump sum or by releasing equity in your main residency. So what is the best way of investing this money? Option 1 - Stick it in your local bank by some considered the safest option, "at least you can't lose it, and you get some guaranteed increase in value" usually goes the argument. Money in the Bank - assumed return: 4% As you can see, after 10 years, you've made virtually no progress at all, especially when you consider the effects of tax and inflation. Option 2 - Stocks and Shares Now over the last 10 years, although admittedly not in last 4 years, the stock market has been very popular. However I cannot accept it is a better bet. When I read that the stock market is a better bet over the next 2 years as will go up by 15% a year, as opposed to the property market that may go up by 5% a year this does not take leverage into account and so paints a very distorted picture!! And I will show you why. It's hard to say what sort of return you might get on the stockmarket, but let's say you get 12% a year for the next 10 years - very unlikely, but let's just go with this. So if you could beat the odds and get a 12% return every year ...... Money in the Stockmarket - assumed return:12% Now that's a big increase on sticking the money in the bank, but clearly is not guaranteed. But can you do better?? I think you know what I'm going to say? Option 3 Property One of the great things about property is it enables you to leverage the £20,000 to purchase a £100,000 investment property (in other words, borrow the remaining £80,000 from the bank). Now say the property market slows down to an average of only 6% return for the next 10 years. This would probably be a fair estimate in the UK, although there are plenty of markets which are growing more rapidly, lets concentrate on UK for this example. Money in Property - assumed return: 6% Make sense? So you make 6% increase on the full value of the property, not just the £20,000 which you initially had. This is the power of leverage. In effect you have increased your initial investment 5 fold in 10 years! So even if the stock market increases by twice as much per annum as the property market over the next 10 years, you can make far more money from property. Now for simplification, I have not included lawyers fees, agents fees or stamp duty. Admittedly buying a property has more additional costs than buying shares, but would not make a significant difference on your profits - around 4% in the UK, higher overseas. One thing to point out is that in the short term you have greatly increased your potential loss ie if the property went down by 10% in value, you would lose more of your initial investment, because the property value would go down to £90,000, you still owe the bank £80,000, so you now have £10,000. In comparison if the stock market dropped by 10%, your investment would be worth £18,000, as only lose 10% of £20,000. However over a length of time, using leverage to good effect and using all the other skills you need when buying property, property is by far the best investment, for the majority of individuals. The figures I have used have been very conservative, many individuals are making far more than this on property, whereas anyone making the same returns on the stock market, will generally be benefiting from some sort of insider dealing or be very high up in the company, I would imagine! Alan Forsyth is a full time property investor and developer with 10 years experience in UK and overseas. He is managing director of http://www.property-investment-tips.com which offers free independent advice and tips on property investment, courses, countries, strategies, mortgages and much more - with a free newsletter every 3 weeks giving latest tips and offers to over 500 investors. Sign up today at the site for free independent advice!
MORE RESOURCES: This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news
Google News |
|
|
|
RELATED ARTICLES
Find Out If There Are Sexual Predators Nearby Before You Buy A Home or Property! When looking for a new home or property, buyers ask many questions. Typical questions might be about the history of the property, property tax amounts, the school system, proximity to medical facilities, shopping malls, etc. Evil Gains Entry When we open our doors to strangers, we can never be certain what malice an outsider might bring in. Police officers tell us to keep our doors locked with good reason. Basic Real Estate Valuation Given the current interest (dare I say hysteria) associated with investing in dirt and buildings, I thought it might be interesting for our readers to have a quick, dirty manual on real estate valuation. My perspective comes from years in the industry as well as some time learning at the knee of some of the better real estate minds in academia. Maintaining Small Town Charm In An Ever-Changing World Virtually any state in the country has the appeal of multiple small towns. Ask almost anyone who lives in small town why they are here and they'll tell you they enjoy the small town feeling while being close to all the conveniences of a larger city. Choosing a Realtor Purchasing a property, either as an investor or as a prospective homeowner can be one of the most exhilarating and frightening experiences of your life. In both situations it is imperative that you find just the right property at the right price. Why A Final Inspection Is Necessary In the sales contract, the sellers of your new home agreed to leave all the light fixtures, custom blinds, and refrigerator. When you walk in the home on moving day, to your surprise, all of those things are gone. Give Your Home A Timeless Feel In the world of real estate, there is a huge difference between an old home, and a classic home. It's comparable to the idea of used clothing versus vintage clothing; only on a much grander scale. Five Ps of Selling Houses 1. Planning:Know Your Target BuyersThink about your neighborhood and the buyers purchasing homes near your property. Buying a Home in Westminster The city of Westminster is centrally located in the Denver metropolitan area. Its easy access to amenities in both Denver and Boulder really coax investors into buying a home in Westminster. How to Sell Your House by Lease Options Many people buy a house then have to move within a few years, due to divorce, relocation or financial difficulties. Without any equity though, it can be nearly impossible to find buyers and you still have realtor fees to contend with. Real Estate Investing By The Numbers Just like most things real estate investing can be broken down into easy to learn step.Step One - Learn the basics:Ownership of real estate is evidenced by a valid deed. Negotiating and Sales Skills Are Critical When I first started getting active in creative real estate, my skill set at negotiating was very weak. I had done the telemarketing thing for American Express as a financial planner and had studied and learned a few techniques. Home Appraisal Values Are Critical To most, owning a home is a necessity, but sometimes it is a matter of pride or a business investment. Home appraisal values become relevant if one wishes to sell his house. Sell Your Income Property For More Selling income property isn't like selling a house. You can paint a house, and get a little more because it looks nice. Selling Your Property Without An Estate Agent It is possible to save £1,000s selling your home privately and cutting out the estate agent, but what are the issues that you need to consider?Pricing the propertyPrice your property too low and you could short-change yourself from the true market value, price your property too high and you will simply put off potential buyers.Before you put your property on the market, you need to do some market research. Real Estate, Real Property and Leased Land; Definitions, Discussion and Explanations Delaware, and the rest of the original British Colonies, has some land that is leased rather than owned by the residents of that land. Much of it is not evident to the casual observer. Homes For Sell By Owner - FSBOs and Buyer Brokers You're selling your home as a FSBO (for sale by owner) and you get annoyed when real estate brokers call you, right? That's a reasonable response when you're doing all the work to market your property to save thousands of dollars in broker commissions. However, when a "buyer broker" calls, you might want to listen. Home Selection Checklist - A Good Aid When Choosing a Home This home selection checklist is a tool to help you select a home that is right for you and your family. Before you select a home and get a mortgage, you need to know if you will be happy with the home you select for the coming years. Real Estate Investment - Why it is Big Business? When examining the different asset classes, real estate is generally far less volatile than shares and real estate tends to be the haven that investors flock to when other asset classes are suffering.It is true to say that investment properties can have many benefits in terms of building long-term wealth, but we must never forget that this wealth is not guaranteed!Following the global real estate boom of the late 1980's many investors learnt this hard lesson when they found their properties were worth far less than they had actually paid for them and the bottom seemingly fell out of the over-inflated market. What To Expect In Closing Costs On A Home Purchase Many are taking advantage of this year's low mortgage rates to purchase a home. Pent up with excitement, many families, who have scrimped and saved for a down-payment, jump for joy when the mortgage lender finally approves their application.
|
| home | site map |
| © 2006 TIGER MEDIA |