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Five Tips For The First Time Buyer
1. Determine your specific needs as a first-time buyer. How much room do you need? Are you concerned about schools? Commuting time? Proximity to family and friends? Is this a starter home, or are you likely to be here in five or ten years? Are you...
Getting Raw Land Not A Raw Deal
There is more to buying raw land than meets the eye and more than a few individuals have wished they’d had a second chance upon finding themselves duped, conned, misled, ill-advised, uninformed, oversold, undereducated and often unprepared. They...
Interest Rate Hikes Send Mixed Signals To Real Estate Investors
December 20, 2005 - Successive interest rate increases by the Fed have left everyone wondering what is going to happen next with Real Estate. Will the boom continue or is this the beginning of a gradual slow down?
As Jim Jubak, writing in Jubak’s...
Need More Income From Your Investment Property?
The goal of every real estate investor is to see their property appreciate in value and to have it generate a positive cash flow. The appreciation normally takes care of itself if the property is of good quality, in a good location, and is held over...
Should your Sell your Home yourself?
Should you sell your home yourself? Yes and no. Yes, you should leave the option of selling on your own open and no, you shouldn’t rule out using the services of an agent to help you sell. There are a considerable number of advantages of using an...
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Investment Property: Part 1
1. Investment Property
What exactly is an investment property? Since this is real estate investments 101, we will explain. An investment property is a piece of real estate you invest in with the objective of earning a return. Primary residences are not considered investment properties because the primary purpose of such real estate is to provide a place to live. Common investment properties include rental homes, apartments, condos, townhouses as well as commercial properties such as business or industrial parks and shopping centers.
2. Depreciation
Depreciation is a fancy business way of saying something is decreasing in value. Investment properties may experience depreciation, because typically as a building ages the value of the physical building depreciates. It is important to note the actual depreciation realized is related specifically to the value of the physical building. Historically, real estate prices seem to follow a positive trend. How can this be if old buildings have experienced severe depreciation and thus are worth less today than 20 years ago? We must look at the whole equation. The value of the land is integrated into the equation as well, and traditionally land increases in value. Thus, when we look at investment properties, we normally see an increase in value thanks to the seemingly continuous appreciation of the land the building was built on.
3. Land Contract
A land contract is fairly simple. When you are looking to invest in some property, you will negotiate a price for the land. The written manifestation of these verbal negotiations is a land contract. The land contract for the investment property outlines the terms of the agreements, such as the monthly payments, interest rate, and maturation date of the loan.
4. Land auction
You might have heard other real estate investors talk of a land auction. A land auction is one way of buying an investment
property. In a land auction, land is auctioned off to the highest bidder. Often times one can score a real deal on property auctioned off in such events. Upon winning an auction, you can then sign a land contract for the property and hope your investment property experiences appreciation, rather than depreciation, so that you can cash in on your increased equity a few years down the road.
5. Lien
Before buying an investment property you will want to make sure the property does not have a lien against it. A lien is basically legalese for a claim against the property. A lienholder owns a legal right to extract their money from a property should the borrower default. Thus, if you buy a property that has lien on it, and the person you bought the property has defaulted on their loan, you may find yourself in second standing for right to the property behind the bank that has the lien. It is important to do your due diligence and ensure you are not setting yourself up for a fall by investing in property that can be claimed by others.
Conclusion
Keep in mind that real estate investment can become rather complex. However, if you gain a good grasp on the fundamentals of investing, such as depreciation, liens, and land contracts and auctions, you will be in a position to earn a positive return on your investment property for many years to come.
About the Author: Adam Smith is an informational author for http://www.10xMarketing.com
For more information on investment property, please visit http://www.oneminutemillionaire.com/affiliate/glossary/investment-property.asp
Source: www.isnare.com
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