A Few Tips on Property Investment

May 17, 2006 | In: Property Investing

Are you looking at making a killing in the real state market? Here are a few tips on property investment.

The first bit of advice is to buy retail. Invest in property that is listed by a real state agent or property that is being sold by a builder. Then, all you have to do is wait for the real estate prices to rise so that you can sell it and make a profit on your investment.

The only thing that you need to guard is that your income from the property exceeds the cost of mortgage, taxes and insurance – till you sell it.

Buying retail property is a relatively easy method, but there are a few potential risks involved. Say, for instance property prices were to increase by 2 percent a year rather than the expected 25 percent. In such a case, your profits would be eaten up by debt payments and fees that you pay a real estate agent when you resell the property.

You also need to keep in mind the rental income. Till you sell the property, this income should cover the costs of mortgage, taxes and insurance. Otherwise, you will create what property investors call “negative cash flow” or losses on investment on property.

Another method would be to find a seller who is on the brink of foreclosure or who wants to sell his or her property quickly.

Some websites can help you locate pending foreclosures. Another useful source is Foreclosure.com, which is a subscription service. Once you find a lis pendens (Latin for “lawsuit pending”) filed at a courthouse by a lender, you can send a letter to the homeowner or even visit the property. The owner may want to part with the property at a bargain price before the bank forecloses.

There is also no harm in locating run down properties, refurbish and sell them, as long as you are on the right side of the law.

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