Investing in property is one of the best ways of building up your wealth portfolio. It basically involves finding a decent property located in a suitable area, then going through the long procedure of purchasing the property, at which a lawyer specializing in real estate investment is of great help; this is because there are many legalities involved in change of ownership and if any aspect isn’t handled properly, it could lead to property disputes which have a bad reputation of being dragged for years through the courts.
Before the purchasing process can be completed, you need to procure a loan; for this also you will need to go shopping for banks that will offer the lowest interest rates spread out over a long period of time. Since interest rates may vary over the years, you will also need to decide whether you want to go for a fixed interest rate or a floating interest rate.
After purchase of property and change of ownership papers, you now have to get an idea on the management of the property. This will depend on what type of property you have invested in. If it is a plot of land that you intend to leave for some years to gain on its investment values, then you won’t have to do anything, but wait it out for about 7-10 years for property prices to double up before selling. However, this type of property provides a passive incoming cash flow and the owner gets to pay for the full loan out of his own pocket.
The best option for property investment is the ‘buy and hold’ policy where the property bought is a home that can be rented out. A wise move would be to buy in a Tier-2 city as real estate tends to be cheaper there than in Tier-1 metro cities. Giving out the villa or apartment for rent will go towards paying for your EMIs and with time, rents only go up. So by the time you are ready to sell your property, your tenants have ended up paying for your loan and you still have a house that has appreciated in value over the years. All in all, an excellent deal!
Another great form of property investment is buying ‘Foreclosure Homes’. These are homes where the owner hasn’t been able to pay his home loan EMIs over a period of about 3 months and the bank takes over the home and auctions it off. If you are a smart property investor, you would need to keep your ears close to the ground on this one and try to get in and buy the property off even before it goes up for auction. You are bound to get it at a really neat price; reselling it off at a profit after re-touching the home or using it to earn rent for some time before selling it off at a profit are your next options.
So the best property investment deals involve the buy and hold strategy where you are bound to make the maximum profits, but you will need to check if you have sufficient funds and time at your disposal!