The Benefits of Buying Investment Property

Posted on: February 17, 2011

Categories: Buy, Investors

Author: lbuen

2247354510 63e1747cce m The Benefits of Buying Investment Property

Photo Courtesy of thinkpanama on Flickr

In the past, real property has been a symbol of wealth and power. The moneyed elite own vast lands and were the landlords. Today, buying investment property has stood the test of time as a vehicle for accumulating wealth. In recent years, the idea of investing in real estate with little to no money-down has become popular especially since it means that anyone can own a property even without much funds. Many people also look into buying investment property as another investment vehicle to prepare for retirement. With the profitability of real estate investing, many people were said to be able to achieve early retirement.

Buying Investment Property for Appreciation

“Don’t wait to buy real estate. Buy real estate and wait.” This is real estate guru Robert Allen’s way of saying buy, hold and wait for the value of your property to appreciate. This was the common idea of investing in real estate in the past where only the well-heeled can afford to speculate and plonk their extra funds in property.

Buying Investment Property to Satisfy a Universal Need

Real estate is a commodity needed by everyone wherever they may be. While the world population is growing, the expanse of land is constant in this world. It cannot be manufactured like other commodities.  Although the demand for real estate in some markets plummeted, when the economy bounces back, the demand will rebound with it.

Buying Investment Property to Leverage

Another powerful advantage of buying investment property is you can invest only 10 to 30 percent as downpayment. When you are able to act fast and find a hot buyer for your newly-acquired property, then you do not have to produce the entire amount but still make the same amount of profit. This translates to higher cash-on-cash returns. You can also use it as collateral to make a loan should you need the full amount or to make other personal loans.

In contrast, if you invest in the stock market, you cannot just make a downpayment for the stocks that you want to buy. Moreover, when you invest in the stock market, you leave the profitability of your investment in the hands of those managing the company of the stocks you bought. In many instances, buying investment property is also less volatile than paper assets.

Buying Investment Property and Control How You Rake In Profits

If you are not the type to leave fate into the hands of chance, such as hoping for the value of your property to appreciate soon, then you have a handful of other options where you can control how you profit. You can buy and wholesale or flip a property to make a quick buck. You can also buy a property, rehab it to increase its value and sell it with a higher margin. You may also make buying investment property into a cash machine regularly spewing cash into your account. This is by buying a property, maybe fix it and then rent it out. Although this may entail more work such as property management, the cash flow it can potentially bring you may mean semi-retirement if you develop the right system. You can also hire property managers to do the extra work for you.

Buying Investment Property to Defer Tax

Buying investment property, maybe a bigger one, using the proceeds of the sale you made for another property entitles you to a tax deferment under the Internal Revenue Code Section 1031. You do not get taxed until you liquidate the investment. This is not applicable to paper investments.

The advantages of buying investment property makes it a lucrative and versatile way to accumulate wealth and a great vehicle to fund retirement.

Buy Investment Property – Learn How To Buy Investment Properties and The Things To Consider When Buying A Buy To Let Property

Buy Investment Property Now!

With the benefits of buying investment properties spelled out above, topped up by the current rock-bottom interest rates and prices of homes in a market that is starting to bounce back, the question you must be asking now is not anymore “should i buy an investment property?” but “where to buy investment property?” and “how to buy investment property?” The following discussion will answer these two significant questions of a newbie real estate investors.

How to Buy an Investment Property

Strategy. The first important thing to do is to decide on your strategy, whether you want to buy a rental property (or buy to let investment property if you are buying investment property in UK), buy, fix and resell, wholesaling and flipping, or buy and hold to wait for appreciation. The type of property you buy will greatly hinge on this strategy helping you to decide whether to buy a multi-door apartment building, 3BR/2TB single family units, handyman specials, or commercial properties.

Financing. Your buying investment property checklist must also include your strategy on where to source your funding, be it from your own deep pockets, from your self-directed IRA, from hard money or private money lenders, from banks and other traditional mortgage lenders, or using equity to buy investment property. Here is a helpful article on obtaining financing when buying property investment.

Real Estate Agent and Attorney. You will find the expertise of a veteran real estate agent and attorney who work in this niche very valuable in your real estate business. So invest time in looking for competent people in your team who can give you valuable advice and deliver competent services.

Location. This consideration is more important than the structure itself. It can dictate how easily you can rent out or resell the property. It also holds sway on the asking price you can quote, as well as the type and quality of tenants or buyers you can lure. Understand the needs of your target tenants. Think about what type of neighborhood they would want to live in. Consider the following discussion in locating the best place to buy investment property.

The Best Place to Buy Investment Properties Should Be…

…In a neighborhood with low crime rate. Who would rent in a well-built multi-apartment building that is located in a high-crime-rate neighborhood? You may also be putting yourself at risk if you invest in such a neighborhood when you visit your property for inspection or when dealing with tenants.

…Accessible to schools, shopping malls, and work places. So you must consider a location where the  local economy is bustling offering a host of employment opportunities that way you can be sure of tenants that have the capacity to pay for rent.

….Ideally accessible from where you live so that when you need to inspect, supervise some maintenance work, or talk to the tenants, it will not incur you additional costs, such as substantial gas expense, plane fare and hotel fees.

….In a neighborhood or area negatively affected by new regulations or changes in the laws related to zoning, land use planning, and the like, as these may affect the value of your property.

Buying Investment Property With No Money Down

Do you want to know how to buy investment property with no money down? Yes, buying property for investment is not just for the moneyed, as what most people think. You can buy investment property with no money down with the help of traditional, hard money, and private lenders. Savvy real estate investors have also developed creative techniques in buying investment property with no money down, such as by negotiating an installment plan for the down payment, by taking over existing mortgage, negotiating foreclosed properties, and many others.
Here are some more helpful articles on buying an investment property tips and property investment buying.

What Is A Buy To Let Investment Property

Buy-to-let investment properties are UK’s version of rental properties. Investors buy investment properties and rent it out to tenants for monthly cash flow, and some years later when property values have appreciated, they can sell it for profit. Just like in the US, the British real estate industry is also struggling making it a tough time even real estate investors with buy to let investment properties. Rising mortgage rates are eating up cash flow, while falling values of properties is threatening prospective capital gains.

Buying investment property is indeed a lucrative business that can be done with little to no money down. Although it can be a gnarly undertaking and market conditions can be against you, once you understand the mechanisms of the market, the techniques of trade, and know where and how to buy an investment property, it can be developed into a semi-automatic source of income.

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One Response to “The Benefits of Buying Investment Property”

  1. Mike Strong says:

    I am looking for bulk REO buyers. Custom tape. Southern California available. Nationwide. I have several sellers. Tell me what you want to buy and I will find it. 888-332-2820 Mike Strong

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