Most people are reluctant to purchase real estate properties these days. That’s good news for real estate investors. Why? Various studies have shown that investing in real estate is a lucrative investment strategy. The fact that the real estate market is struggling makes it the perfect time to invest in properties. It is the best moment to lay your hand on a commercial or residential property to gain windfall rewards later on.
Real Estate Investment and Their types
A chairperson of a large local company says that there are two basic types of real estate investment. The first is where you want to secure a stable income. You purchase the house to add value to the real estate and earn income in form of rent.
The second type of real estate investment is where you buy real estate to gain later on. It is a speculative activity ideal for people who are risk tolerant and want to earn the best possible return on their investment. And this is the perfect moment for such people to invest in the real estate market.
High Cost Means Lower Profit
If you think that higher-cost properties are best for real estate investment, then think again. Expensive properties generally are not hot for investment. They have a low chance of earning suitable returns that do not cover the cost of investment.
The best option is to buy a property when the cost is low. A low cost property in established neighborhood have greater prospective of earning high returns as compared to expensive properties in up-and-coming new areas.
According to a real estate expert, first time investors should look for properties that are in a safe clean neighborhood and cost for around $100,000 to $150,000. Furthermore, the area should not be prone to natural calamities for obtaining high yields from the investment.
Obtaining the Mortgage
You say that now is the best time to invest in real estate market, but will I be able to easily finance the investment? You might be surprised to know that you only need 25 to 30% to purchase a real estate property. Banks that finance these projects are unlike Freddie and Fannie-type lenders. They do not look into your credit history. They normally calculate your expenses and net operating income to give you the loan.
