Any property that is
obtained in order to win and expect a return on investment is classified as
property investment. Property investments may be in the form of a block of
flats, family homes, houses, apartments, vacant land or commercial property.
Property Investments in long-term properties usually refer to the
properties that the landlord not to rent it occupies but in some cases the owner
may occupy a part of it and make a profitable business. NRAS Property Investments s
a profitable place to make money. Property investment is an exciting way to earn
substantial returns. In the property terms, you spend a certain amount of money
in buying investment properties in demand, and get returns in 2 forms:
Positive Cash Flow Property | Tax Minimization | national rental affordability scheme
1)
Capital Gain
·
You buy the property at low cost and sell it
at a higher cost.
·
It is not necessary that the property has
been completely developed. You can buy a house that is in the planning stage
and sell it before it is built.
2)
Rental Income
·
You can rent the property that you own. The
rental income provides steady returns.
·
A smart model of investing is to take a
partial loan. Ensure that the installment of the loan is covered with the rent
that is received every month. In this manner, your purchasing cost is only a
part of the property value. This model also isolates you from banking pressures
as the installments are covered with rent.
For the buyers the main aim is to buy an investment property that will
gain in capital value in the years ahead and/or provide a rental income -
either now or in the future. This doesn’t necessarily mean buying huge investment
properties at huge prices. In buying any investment property there are certain
costs involved which include:
·
Purchase Cost:
The cost of buying the investment
property
·
Maintenance Cost:
This may include payments to the society watch, utility bills, garden upkeep,
occasional cleaning maid and any other mandatory payments like security etc. In
the case of rentals, this cost is covered by the tenant. These maintenance
payments are made irrespective of whether the property is in use. You may
appoint a real estate management company to look after your assets.
·
Financial Cost: This
is the cost of money that gets added to the purchase cost. Let’s say you have
taken 50% loan to purchase the property and you are paying interest to the
bank. The interest is the financial cost.
·
Registration / Transfer Cost: This
is the cost involved in getting the property registered. Upon sale, the
property needs to be transferred. Sometimes there may be costs involved in this
activity.
·
Commission / Premium: Sometimes
there is a premium above the basic purchase price that is paid. Some property
dealers charge a commission to the buyer.
·
Insurance: It
makes sense to insure the property, even if you are not renting it or living in
it. A basic theft and damage due to natural causes like floods, hurricanes etc.
Policy would be necessary to protect the investment.
·
Evaluation Costs: From
the time of purchase to sale, you will evaluate the property multiple times.
Try to roll these costs on the other party.
·
Odd Costs: These
are normally small costs that arise out of unplanned and unforeseen
circumstances. This may include pipe breakage, cost of eviction etc.
