Secrets of Making Money from Real Estate - Part 2

Leverage: With real estate, people and companies will lend you money to invest. How much real estate can you buy with $20,000? Probably between $100,000-$300,000, depending on the lender. So you only really need a small portion of the funds to buy an expensive asset.

High level of control: With real estate you can do things such as write your own terms for the contract, increase the properties value, increase the rent, build, subdivide, negotiate lending terms. Although you have a high level of control with a business, it is a bit more risky. How much can you influence the price of stock? Well, not a lot unless you are within the company.

Capital gains: With real estate you can instantly create wealth and equity by buying the property at a discount. Also the property can appreciate over time. For example,

Growth is 8%. You buy a property for $125,000 with a $12,500 deposit.

First year value: $135,000
Second year value: $145,800
Third year value: $157,464
Tenth year value: $269,865:

$12,500 was turned into a gain of $144,865: over ten years! Just imagine if you had a property in an area of 10% growth!

"Yes, but the value of property can go down too!". True the property market can go down, but if you follow the right investment strategies you wont loose money. It is that true the property market can go down. However if you never sell how will you loose money? You may loose equity at some point but the prices are bound to eventually come up again. Even if the prices are down you are still collecting the rent weekly so there should be no problem.

Cash flow:: The capital gains would be enough of a reason just to invest in real estate. But apart from your keeping your money safe, it can also provide you with a profit. Going back to the previous example,

You have an interest only loan for $112,500. Lets assume the property has a 9% yield and the interest rate is at 5%.

Rent from property per annum:$10,125

________________________________

- Interest payments per annum: $5,625

- property taxes per annum: $1,000

- Insurance per annum: $600

- Repairs: $200

- Property manager: $1,000

Before tax profit: $1,700

Now whether you loose profit or gain profit at this point depends on where you live and the tax laws. For example in New Zealand from this point you could claim depreciation of building and chattels and make more profit after tax. You may also receive a tax break on the interest you pay on your loan. However even if you were taxed on the $1,700 you would still make money.

Insurance:: How much would it cost to insure a business? The premiums would be HUGE! On the other hand, how much does it cost to insure a property, not a lot. Even if natural disaster occurred, with the right insurance plan you wouldn't loose money.

Demand:: Home ownership is decreasing throughout the world, therefore it is more common for people to rent properties today then ever before. This will work in your favor because if demand is increasing for rental properties, prices for rent will go up.

To sum it up using out example:: You have made a deposit of $12,500 to buy you a $125,000 asset which, is becoming more in demand, in ten years can increase to $268,865 giving you equity along with a passive income of $1,700 per year!

This article was written by John Whiteside. The original article can be found here http://www.use-your-equity.com/reales tateinvesting.html . Use-Your-Equity can show you how to create value in your home, then show you how to use the newly created equity to make money. http://www.use-your-equity.com for more information.

---

Do I Need A Real Estate Survey?

Getting a survey before you close on any real estate... Read More

Dealing With Difficult Tenants

When managing residential properties one bad tenant can often undo... Read More

3 Tips to Help You Sell Your Timeshare - For More

The values of timeshares are constantly changing. There are numerous... Read More

Find Bucks in Yucks! 20-Year-Old Woman Turns Doghouses into Dollars!

Do you dream of making money in real estate? Do... Read More

Why Invest In Property?

Why property, some people ask when looking for an investment.... Read More

Property for Sale in Bulgaria - Emerging Property Markets 1

The latest investment property headline is this: Popular and well... Read More

Real Estate Bubble: Fact or Fiction?

The real estate market buzz across the country these days... Read More

Forclosure And The Durrett Rule

It's probably happened to you...Folks learn that you know something... Read More

As a Realtor, How Do I Attract Listings?

Have you ever noticed that despite the massive number of... Read More

Important Facts For Home Buyers

If you are considering buying a home or have spent... Read More

Property Types A, B, C And D

One of the biggest problems individuals just starting out have... Read More

Why Canadian Real Estate is Such Good Value

Real estate agents, Canadian citizens and foreign investors interested in... Read More

Want To Be Profitable In This Real Estate Bubble? I?ll Show You How In Just Three Easy Steps

STEP#1. First you have to recognize that in order to... Read More

Back To The Future - Big Changes Are Coming, Get Ready Now

The comments below are quoted from a recent speech by... Read More

How to Decrease the Value of Your Own House

Owning a house is part of the American Dream. Depending... Read More

Selling Your Home ? Alone or with a Broker?

How do you decide whether to sell your home (or... Read More

Investment Real Estate Secret: Buy a House Today, With No Money Down

If you've read my article "Purchasing Property With No Money... Read More

Expenses of Home Ownership

Hopefully all goes smoothly when you purchase your home. In... Read More

Wealth Building ? An Advantage of Home Ownership

As you grow older, the issue of wealth building comes... Read More

Give Your Home A Timeless Feel

In the world of real estate, there is a huge... Read More

Maximizing Curb Appeal and First Impressions to Sell your Home

We all know that a home or property of any... Read More

Buying an Unfinished Home Maybe Your Answer

For the first time "want-to-be" homeowner, purchasing an unfinished new... Read More

How To Buy Property in Spain Safely

Buying property abroad is not an undertaking one should embark... Read More

Vegas: The New Frontier

Unless you have been living in Siberia, you know that... Read More

Getting Ready to Sell Your Property

We all have had the experience of someone important coming... Read More

What To Expect In Closing Costs On A Home Purchase

Many are taking advantage of this year's low mortgage rates... Read More

The Devine Secrets Of The Ya Ya Lease Purchase Hood

The biggest secret of conducting a successful lease purchase business... Read More

How to Sell Your House For Full Price

Many people believe that a real estate broker is needed... Read More

No More Estate Agent Fees

Follow a few simple guidelines, and marketing your own home... Read More

Real Estate: Buyers Agent, Sellers Agent & Dual Agent (defined and explained)

There is a relatively new and not always well understood... Read More

Budgeting Your Log Home: Where Do You Start?

The Log home industry has matured these last many years,... Read More

You Dont Need Health Insurance!

Seems almost every situation in our lives is centered on... Read More

5 Factors of Selling a Home

There are five major factors to consider when selling a... Read More