Essential Features That Make Real Estate Investing Profitable
By: Joseph Grinkorn
Introduction • From time to time individuals attempting to make up their minds the place to place their cash ask me if actual property ventures are kind of worthwhile, in comparison with different companies alternatives round. • My response is all the time that aside from its potential for yielding vital income, investing in actual property typically confers lengthy phrases advantages.
The Most Important Factors for Investing in Real Estate • Location of the Property • Valuation of the Property • Proven to be Profitable Even During a Recession • Real Estate Investments Are Immune to Inflation • Real Estate is Uniquely for Being Universally Acceptable as Collateral, Towards Securing Funding from Banks • Real Estate investment allows the use of other people’s money
Location of the Property •
In real estate investing, one phrase that you’ll most definitely hear is location, location, location! Where the investment property is located affects everything related to it from the rental income the property investor can charge, through the operation costs and the cash flow, to the appreciation – all of which are other factors that determine the profitability of investment properties!
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The next important factor which determines the profitability of the investment properties is the expected cash flow. It goes without saying that the main goal of every real estate investor is making money from the investment property. To start making money, property investors must invest in positive cash flow properties. Positive cash flow is when the incoming cash flow outweighs the outgoing cash flow spent on managing and maintaining the investment property. If a real estate investor’s cash flow is negative, he/she is losing money instead of making money from the rental property – which is obviously something no real estate investor desires!
Proven to be Profitable Even During a Recession • When the country is facing recession, many clients ask the real estate consultant regarding which could be the best way to invest money. The consultant has recommended that the real estate investment is a secure way to invest money. The consultant certifies that the other businesses can come down over a period of time but the land value always appreciates.
Real Estate Investments Are Immune to Inflation • Inflation usually has harsh effects on conventional investments, but the interests of viable investment options are protected during inflation. Pressures of inflation have a positive co-relation with real estate values. So the rental rates go up when there is inflation. The real estate owners thus offer competitive rates matching the effects of inflation. One way to cushion against the effects of inflation is to hike the rental rates. So the losses induced by inflation does not affect the realty sector.
Real Estate investment allows the use of other people’s money •
Real estate is a physical property which is referred to as a hard asset. This is very attractive for financiers who have money to invest. Real estate payments are made either using cash or by mortgage financing. In the second case, the money can be arranged in low financial sums, during the duration of these payments the value of the property continues to increase. Thus those financing the acquisition feel more safe.
• Joseph Grinkorn is a successful entrepreneur who provides the help in real estate marketing, social media and commercial real estate.