**PERMISSION TO POST ADMIN** 6 Reasons Why You Should Invest In Property Buying property can be one of the most rewarding investments you can make. Not only does it serve its purpose as a place to live in, to work from, it is a great investment that can make you more financially secure many years down the road. Here are 6 reasons why you should definitely invest in property. Provides a Home and Workplace The first investment property one should acquire should always be your own home. Unless you are staying with your parents and happen to be the only child, you should always make preparation for the eventuality you would have to move out and get a place of your own. Getting an own home is also often a priority for getting married and starting a family. For those with your own small business or home business, you can consider investing in a Small Office Home Office (SOHO) unit. SOHOs are built in a way that your office and home are separated but just a doorstep away. It provides the convenience of working near home and still allows the separation for you to not bring work home. Good SOHO designs also allow for visitors to visit your office section like an office building, but blocks off the residential section for complete privacy for the residents. Acts as a Saving Tool If you do not own a home, you would have to rent and that would make the landlord rich by giving your hard earned money to the landlord every month as rental. You should always pay yourself first and that’s to pay yourself rent for staying in the house. You will save a lot of money by paying installment for a housing loan as opposed to paying rental. Firstly, you will save money on the differential between the installment and the rental; rental is higher than installment in most cases. Secondly, you will save money on the principal portion of the installment as that money goes towards reducing your loan instead. The only true cost for owning a home is the interest charges on your bank loan and of course the opportunity cost of not investing the money is other assets. The capital appreciation of the property and the reduction of loan will increase your net asset values faster than you can imagine. Rental for Passive Income If you already have a house, should you buy another one? Absolutely! That’s assuming you have the savings and the income capacity to pay the installments for another house. You can then rent out the house and become a landlord! The tenants will now work for you as they are paying you rental to make you richer. If you took out a loan for 30 years and you manage to get a tenant to pay your instalment for you, the house becomes yours for free in 30 years! Furthermore, if you manage to lock in a rental rate above your installment, you also get positive cash flow from your property. Hedge against Inflation All things kept constant, barring an economic downturn, property values will go up in the long term. That’s because properties are known as a good hedge against inflation. The combination of lower supply of land, increased demand through population increase, rising construction costs all will push property prices up. Inflation is generally at an average of 2-3% per year; as such one would expect property prices to go up in the same proportion. This is only applicable to long term as in the short term; there are many factors which can cause the property prices to spike up and down compared to the actual value. Never Become Zero in Value Unlike investments in stocks and businesses, a property cannot become zero in value. Properties are physical assets which sit on land; as such there will always be a value to it. Stocks and businesses however, can become bankrupt and the real risk of losing everything is there. While there may be short term fluctuations in value, the long term potential of property is always upwards as described above. There are some exceptions, where once sought after properties become desolate, infested with criminals and gangsters, the property prices will become very depressed and may never recover. Leveraged Investment Property investment is the only investment where the bank is willing to lend up to 90% of the purchase value. Reason is simple, banks also recognize the long term value of properties and getting a housing loan may be the only way for most people to acquire a home when they most need it. The leverage helps to magnify the returns of both rental and capital appreciation on capital invested. For example, if you bought a property of 5M with 20% down payment and the property appreciates by 10%, you have already made a 50% return on your investment! (500k increase based on 1M down payment). The flip side is if you speculate in properties, the leverage will work against you in a downturn and can cause massive losses. AFFORDABLE HOUSE & LOTS FOR SALE *For people looking for valuable assets & investments https://facebook/jtm.affordablehauz4everyjuan 0916.557.4141 gio.jtmhomerealty@gmail
Posted on: Fri, 25 Jul 2014 00:20:28 +0000
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