Are you looking to engage in trading real estate investment property? Real estate investment entails possessing, administration, letting out and buying real estate investment property either to be occupied by the buyer or as an investment that will be sold at a higher price later.
Aptly put, when an individual is investing in real estate, the aim is to commit capital now, and it yields profits, and you have more cash later. This gain or “profit” realized on the landed property investment ought to sufficiently pay for the chances taken, taxes paid, and other running charges on the property such as utility fees, periodic maintenance, and insurance against damages.
What Does Real Estate Investment Property Entail?
Do you want to know what buying real estate investment property involves? When you buy real estate as an investment, it merely means you are committing capital at present to realize a profit at a future time. So, practically, you are purchasing the interest on the landed property, either residential or commercial buildings and selling them later at a profit.
Buying real estate investment property could also be a developer who is purchasing an incomplete building, complete it and sell it later for a profit. In fact, investment in real estate can be the simple act of buying land in an unripe location, holding it for some time and selling it at a prime time, and of course, at a profit. This is also called land speculation.
Buying Real Estate for Owner-Occupation
On the other hand, when you purchase real estate for owner-occupation, you are a homebuyer who wants to acquire a property to live in with your family. Never forget it could also be worth in water, trees, agricultural lands that you want to use for yourself, and does not necessarily need to realize a profit on it.
However, this article is written to address buying the real estate investment property and will be discussing essential things that could make your purchase a big hit, so, why not come along as we uncover these tips.
How Do I Buy Real Estate and Make Money from It?
Buying real estate as an investment property and making money from it takes more than just committing your capital on landed properties and expecting money to grow just only because you’ve invested. No, it does not work that way.
You need to understand the intricacies surrounding each type of real estate investment, so you can evaluate which one is the most ideal for you before committing your precious cash. Let’s get straight into the types of real estate available.
Investing in Real Estate Rental Properties
Investing in real estate rental properties is as old as owning land itself. Here, the real estate investor buys estate properties which could be housed, office buildings, hotels, shopping malls, then rents it out to tenants. The latter would pay rent yearly or monthly to you, the landlord. It is this interest that makes your profit on the real estate you have bought and invested in.
This process looks quite simple on the surface, albeit, there are pitfalls to watch out for. Some tenants can be frustrating; they may either refuse to pay rent on time or use the property in a deteriorating manner. This will place stress on you as an investor, you can’t evict them till the contract period ends, so you might end up losing the rent. Similarly, the tenants may cause substantial damages on the property, leaving you on pressing debts. In fact, the worst case scenario might play out, such that you do not get any tenant to rent your real estate at all!
You now can see the need to consider who the tenants will likely be before buying real estate as an investment property.
There are other options open to you as if you want to buy real estate as an investment property. You can purchase real estate investment trust, you can veer into land speculation, and you can as well go into property development. The underpinning guide is that you should determine beforehand, the options that most favour you if you must make a profit on your investment.
What do I Consider Before Buying a Real Estate Investment Property?
Now that you know how to invest in real estate and make a profit, it is paramount you know some tips to look out for before buying real estate as an investment property.
Condition of the Building
The very first thing to consider is the condition of the investment. It is necessary you check out the state of the real estate before buying. You’ll do well to check out the exterior of the property as well as the interior of the real estate. How solid is the structure of the building? You might need to engage a professional evaluator in evaluating the repairs that are needed and ensure it is fixed before anyone moves in.
Another thing you need to look out for is the taxes to be paid on the property eventually if you purchase it, as it will determine how much profit you will make on the property.
This is the about the most important thing to consider before buying real estate as an investment property. The sites of the property have a telling effect on the price. Prime locations command higher price on for real estate investment than undeveloped areas
Cost of Insurance
There is the need to consider the type of insurance cover payable on the real estate before buying the property. High insurance cost will reduce the profit that could’ve realized on the property.
Lastly, you need to plan for unplanned expenses. Determine beforehand, how much it will take to fix the roof, replace the water heater and such likes. If you do not plan ahead, you may be cutting back your profit.
This article has examined the essential tips to consider before buying real estate as an investment property. If these factors are critically looked into beforehand, you will surely make an excellent real estate purchase.
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