The stock market is too volatile and keeps your heartbeat swinging in rhythm with the market, thus making real estate investment a more stable option for growing your hard-earned money. But one has to be real careful when settling on a property for investment – as the biggest income from real estate is the rent, and if you happen to choose a property that doesn’t attract renters easily, then you are in big trouble! Choose a property that is in a marketable space, where even if you can’t charge too high a ceiling for the rent, you will at least break even and use the rent as your EMI payment for loan against property.
Spreading out your home loan over a long period of time results in an official ‘depreciation’ value of the rental building; this protects your income and reduces the tax charges. Of course, reality is different as cost of property only increases with time (not depreciate) and you still get to make some easy bucks on the property, after getting your renters to pay for it – through monthly rents being your EMI payments.
Having someone else pay off your monthly EMIs this way is a fantastic feeling! Especially when it’s against a loan you took for your own rental property…. It’s like having a forced savings account, where your equity keeps getting better over time. And you end up fully owning a property which you only paid for partially!
Combined with the benefits mentioned above, appreciation in value of the real estate investment over the years goes hand in hand with inflation, resulting in long-term returns.
Now that you know how the system works, you need to go through some general steps to start investing in real estate.
- You will first need to determine how much free capital you have to tuck away indefinitely into the real estate business. Aside from this capital, you should also have some other savings too to use in case of emergencies; otherwise you would end up selling the property prematurely, ending up in loss.
- You will need to dig around and do your share of research to find the right property and location that will yield your required profits within your acceptable time range.
- You also need to set up a budget for your investment that runs into six figures. Aside from this capital, you will need an additional cash-cushion in case of any additional investment –related expenses that could crop up.
- The most important point when going into real estate investment is being prepared for set-backs. Just like any other business endeavor, you will end up facing challenges, so doing your home-work right and being prepared is the key to riding the downward wave successfully.
Some general common sense tips on choosing the right property for renting purposes such as apartments or villas include safe locations that are in walk-able distance to important facilities like shops and public transport terminals. You should also opt for homes that offer attractive outdoor amenities, eye-catching interior finishes and include the use of low-maintenance materials. With all these pointers, you should now be ready to start investing!
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