Investing in property requires some knowledge in investment principles to help you turn a minimal deposit into a cash cow.
The power of leverage
Leverage is the principle of borrowing money to buy an asset that will appreciate over time. When you invest in an asset with a value that will grow faster than the amount you repay, your wealth increases.
When you have limited funds for investing in property, leverage allows you to grow your portfolio using borrowed funds. Investors prefer property to other types of assets because it has good leverage potential and lenders are generally more willing to finance property investment because it is tangible, less risky and easy to value.
It's easy to add value to real estate property without spending much for it. Many investors engage in flipping where they take a property with lots of potential for adding value and remodel, renovate, or simply apply cosmetic touches before reselling it at a much higher price or renting it out. Adding value using minor modifications won't cost much but can significantly increase the value of your property as well as its rental income. You can repaint it, pave, landscape the garden, renovate the kitchen, build a deck or add a patio to improve its value.
Selling property is not the only way to access the profits of your investment. You can rent it and earn income immediately from the advance rentals or refinance it. By obtaining a new valuation of your property, you can borrow more funds using the revalued property as security.
Your real estate income can be offset by tax deductions relating to your investment such as building depreciation, property management fees and transportation expenses. A tax accountant can help you structure your portfolio to get the most out of your investments by recommending options that effectively reduce taxes which can save you thousands of dollars.
Hedge against inflation
Real estate property is a favorite of investors with diversified portfolios because its value grows faster than the inflation rate. If you have extra cash lying around, investors maintain that it is better to invest it in real estate property where the value substantially appreciates rather than keep it in a deposit account especially at the current low earning rates.
Investing in property can be a lucrative business for anyone who has the mindset for it. To boost your chances of success, get an education in property investment, do your own research and consult experts who can teach you how to identify the right property and its price.
Kerry Finch writes about the latest trends in marketing and investing. Getting the basics right is the key to any venture that includes investing in property. Seize the opportunity now to learn more about property investing at property investing and get on the right path, from the very beginning.
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