Leveraging Investment Properties
Real estate investment properties are both profitable and risky at the same time. Risky due to the ever-fluctuating market conditions impacting the real estate segment and property prices; profitable because real estate market can gain high returns in the form of greatly appreciated property value if the investors are able to time the market conditions. It is essential to use every opportunity to invest in the property by leveraging investment properties for loans.
As prospective real estate investors, one should use every opportunity by reaping the benefits of leveraging investment properties.
Leveraging investment properties is helpful in using the equity generated by the appreciated value of an existing rental or owned property to secure a loan or purchase a new one. The process involves borrowing money in the form of investment loan to increase the potential return of an investment. Securing a mortgage to buy a property is also a form of leverage. Based on this criterion the size of the mortgage either reduces or remains the same. Equity banks specialize in advising investors on leveraging their property investment loans in an efficient way and can be approached for consultation.
Various ways to know the value of real estate investment:
- Selling the property
- By theAppraisal method
- Determining the Net Operating Income
- Replacement cost method
How can you benefit from real estate Investment:
Continuous Tax benefits: Real estate investors enjoy several benefits in terms of substantial tax deductions and at the same time enjoy the benefit of regular cash inflow on the existing property investment.
Asset appreciation: Real estate investments, as an asset class, have historically seen a constant appreciation in value that meets and exceed all other investment types. Properties and real estate business, inevitably, increase in value as the net operating income of the real estate improves as the rent goes up due to efficient management of the property.
The benefit of Ownership: Property investment gives the sense of ownership in long run. It’s a security net, while other assets run the risk of the market and economic conditions.
As an investor, it is better to understand the property market thoroughly. It helps to make sense of all the jargons and keep track of all your investments. Property investments require a lot of research and expertise in handling the legalities. If you are a beginner in investment properties, it is wise to take the professional help. But if you are knowledgable, leveraging investment properties is one of the best way you can purchase a new home.
