Real estate investment helps you to earn money and increasing your net worth. The first rule of real estate investing, even before location, is be very careful with whom you are dealing. Most of the real estate investors come to the market later in life because they are concerned about their retirement and are at their highest potential earning power, or some have inherited money or real estate.
Real estate investment is different from other investment, because you can earn profit almost any of your own property. Real estate values rise and fall in accordance with the economy, if the values drop, it can rise again in the future.
There are major reasons that a real estate investor might choose while real estate investing:
A good knowledge of the real estate market and the neighborhood in which you are looking to buy a property.
After all expenses have been covered such as mortgage, vacancy factor, repairs, property management etc., there still can be some money left on the table. Most banks will not lend money to buy a property if there is no hope of a cash flow.
You reduce your mortgage and increase your equity with every mortgage payment made on underlying debt. The shorter the loan period, the faster the equity builds.
Paying down the loan or amortization, frees up more investment resources to increase leverage. Some real estate investors use increased equity in one property to free up funds to invest in others.
Property improvement for equity: Many real estate investors intentionally purchase properties at a value because they lack some feature or could use some improvements in condition or amenities. They have calculated that the value of the improvements will exceed the cost, resulting in an immediate increase in equity.
