Advantages of the Real Estate Investing
There are several factors one needs to fulfill in order to be considered successful in the business of real estate investing. Profit, of course, plays an important part in determining success in real estate investing.
Purchasing real estate investments, in general, can be very easy. However, before you begin investing in real estate, you need to know the vocabulary that pertains to this business as well as the advantages of investing in real estate.
There are many advantages in real estate investing. One advantage is the rather large amount of money you may gain if the investment turns out to be very profitable. Another advantage is how easy it is to finance a real estate property. You can own real estate by paying a mere 10% or 20 % of the original purchasing price.
Investing in foreclosures right now by also be one way to gain profits in real estate investing. There are many foreclosures available on the market now
The rest of the amount put down on the house is borrowed from a bank in the form of a mortgage loan.
This kind of advantage is not possible with investing in other expensive items such as industrial equipment, which may cost the same as purchasing a house. Lastly, real estate investing can be explored by anyone.
Although it may require a bit of time to effectively learn all the rules of real estate investing, real estate investing only needs one skill, and that is the ability to discern what is valuable from what isn’t. It is also important to keep in mind that realtors can make a high amount of profit if the house they sell is at a high price.
In real estate investing, terms such as cash-on-cash return and return of capital are oftentimes used. Both terms are related to determining how much profit an investor may gain.
In determining cash-on-cash return, the owner simply computes how much of the deposit he made is actually being returned in the form of rental minus the expenses. This computation does not consider other factors that can be misconstrued as significant in computing for net profit.
These misconstrued factors are the appreciation or depreciation of a home’s selling price. Return of capital, on another hand, is generally applied to properties where the owners are shareholders or unit holders. These “capital owners” are the ones who gain profit from investing in real estate.
Real estate investing can be very profitable especially if you start with foreclosed properties, which are generally less expensive.