How to make money? Real estate investment.
Many of us often wondered: How to make so that the money would come themselves, to pop out of the circle in which you constantly have to work harder to pay the costs, which are increasing and increasing. The answer to this question is really very simple, it is necessary to do so, that you wouldn’t have worked for the money, but the money would have worked for you. There is nothing complicated about it and if you start to make investments today, 10 years later you'll be an absolutely free. The passive income, you'll receive will help you to break out of the circle. Investing in real estate is a snowball that grows with the years exponentially. Just tell me, have you ever imagined that if you take 10,000 and set a goal to double the amount every year, then in 10 years your capital will be more than 10 million? Unbelievable? Nevertheless it is a fact. The same happens to the real estate investments. Beginning investors do not even realize what they can achieve in 10-15-20 years, if everything is done correctly. Here is another interesting fact: If you take the prices of Canadian real estate over the last 50 years. During this time it was everything, and the sharp rise in prices and slumps and long periods of stagnation and slow market recovery. So if you make a plot you will get the price growth of about 6% per year. And it does not mean that in 10 years your property is going up by 60%, it is going up by 6% every year, and it's a big difference. And it's not because of the uniqueness of Canada. The figures are approximately same in most developed countries. And the most important thing is that not one other type of investment can give you the ability to operate with hundreds of thousands by investing only 10-20% of this amount out of pocket. At the same time this is the most reliable form of investment, as your money, unlike the securities market and other investments, not just put into some business, which at any moment can go bankrupt, but are backed by a real object - house, townhouses, apartments, lots.
Not everyone who invests in real estate, get the desired result. Many of us know someone whose investments in real estate have given a negative experience, it usually happens because of the lack of experience. This type of investment, however, as for any other, requires a lot of knowledge and experience. Only in this way the investment will be most profitable. That is why I strongly recommend you before investing money, to get an expert advice not from just a Real Estate agent, but from the agent who is professionally engaged in property investment. Usually it's absolutely free.
So what are the basic rules to be followed to make the investment profitable? Unfortunately, many beginning investors do the same mistakes. I can not share in a short article all the accumulated experience, but nevertheless try to point out the key moments…
1. Do not engage in banal speculation, buying the object under construction with the expectation that the market is stable, everything becomes more expensive and on completion you will be able to sell it for more money. This is a very dangerous theory, the property market is not going up all the time and the chance that at the end of construction prices will be lower than they were is very high. You should know the market very well to practice speculative transactions, look at the next few years, and even then it is a significant risk.
2. Investing in real estate, never put clear deadline for when you will need to sell the real property. If you need to return the invested money, for example, by the time your child will go to university, and the prices fall at this moment, you will lose. Be ready to keep money in the investment as long as it is necessary to obtain the maximum profit.
3. Buying property, always evaluate its cost relatively to the cost of rent for a similar property. If the real estate costs (mortgage + maintenance + living expenses + taxes, insurance, etc.) are covered by the rent, while the downpayment is 20%, this is already acceptable. Ideally, after all payments you should still have money from the lease. In this case, you are insured, and you can safely rent out the property and wait for the proper time to sell.
4. Consider that the current interest rates on loans will not last forever, and eventually they will change.
5. Take into account the development plans of the city. Construction of highways, GO stations, municipal development plans for the area. Consider factors such as the presence or construction of a hospital, university, shopping plazas, malls, religious institutions, migration and so on. All of these factors can significantly affect the real estate prices and rental rates.
6. Buying a property for investment try to buy it below the market price, sellers have different situations and sometimes you can find good deals, well below the market price. Usually they are sold in 1-2 days. And in order to win in such a transaction you need a highly experienced agent who knows how to win deals in a multiple offer that has its own rules. On your part you must be prepared for the deal (have money for deposit, prepare the mortgage pre approval, be able to carry out house inspection quickly).
7. It is very important to arrange the correct property inspection, in order to be sure that in the near future you will not require any significant investments for repairs. Hidden defects can significantly affect the profitability of the investment. Besides that I would not recommend beginning investors to enter into those transactions, which require fundamental repair, alteration, construction of an additional apartment in the basement, etc. These are interesting deals, but leave them to the professionals. They require a lot of experience, and usually the first few transactions do not bring the expected results.