Investing in properties is a safe but slow way to become rich. Many people have become rich through real estate investments by working regularly. You do not need to have a lot of money to start investing in properties. Due […]
Investing in properties is a safe but slow way to become rich. Many people have become rich through real estate investments by working regularly. You do not need to have a lot of money to start investing in properties. Due to the power of leverage, you can buy properties using other money. The basic idea of the investment property is that less your money you can set up to buy a property, the more your chances of making a higher return on your investment. To better understand the power to take advantage of power, compare investing in properties to invest in actions.
Leverage power: – Equitic VS properties
By investing $ 100,000 in shares, allows you to control actions of $ 100,000. A 10% increase in the price of your equity would generate a 10% profit in your investment (ie $ 10,000), while a 100% increase in the price of your equity would generate an increase of 100 % of your investment (that is, $ 100,000). On the other hand, by investing in a property of $ 100,000, you do not need to create $ 100,000 because you can request a bank loan to finance an important part of your purchase. It is common for banks today offer a financing margin up to 90% to help you in your real estate purchase. Therefore, by investing only $ 10,000 in your money, you can buy a property of $ 100,000 in which 90% of the property price is funded by the bank. A 10% increase in the price of the property (ie $ 10,000) would already generate a 100% increase in your investment because the money you have put in place is only $ 10,000 . Would it not be easier for a property of increasing only 10% compared to the price of equity to double before making 100% return on your investment? It’s the power to take advantage of work.
Capital appreciation vs Rental Returns
To succeed in real estate investment, you need either a huge capital appreciation of your properties, either generate good rental returns from your tenants. If you prefer to buy and sell properties only, you will have to maintain the diet or many reservations to be able to respect your monthly bank payments (for the properties financed by bank loans) before possibly disposing of the properties to a Benefit unless you have paid for them in full cash. The other common option of most real estate investors starting would be to rent their properties with good tenants who help them achieve their monthly bank payments. Make sure that the monthly rental you receive from the tenant is more than monthly bank payments to enjoy a positive monthly cash flow.
Once you have rented your property successfully, rinse and repeat the process to create your property portfolio and start taking advantage of this passive rental income in order to allow your properties to appreciate over time to make a good benefit more late if you decide to eliminate them. Therefore, it is imperative that you are prosperous and successful in order to be a prosperous property investor. Always keep in mind that the rent of your tenant is paying for your mortgage and other expenses, which will eventually make you rich in the long run.