How to Create Wealth From Real Estate!
By
way of Introduction, lets consider some of the primary property
investments for people starting out:
·
The principle home/residence
·
A second home/vacation home
·
A home to refurbish/renovate and sell
·
A bargain that needs some minor polish to resell almost
immediately (flip)
·
A single family home for rental
·
An existing rental property
·
A duplex residence & rental
·
A duplex rental
·
Trailer rentals
More
experienced investors will also consider
·
A multi-family rental
·
An apartment building
·
Commercial office space to lease
·
Retail space to lease
·
Residential homes with land to sub-divide & sell or
develop
·
Land for speculative development
·
Hotels & motels for condo / timeshare conversion
·
Single family to apartment conversions
·
Multi-family to single family conversions
There
are many more property investment opportunities available and many
sophisticated ways to invest. The Home Investor works with designated
Home Investor Specialists to help educate and guide customers through
the wonderful world of real estate investment.
Understanding your motivation to invest
Just
like investments in equity, real estate investing can be done with
either capital growth in mind or income generation, or a mixture of the
two. If you are looking for capital appreciation, then buying older
run-down properties and refurbishing them can yield excellent profits in
a very short time. On the other hand, if it’s income generation you’re
after, multi-family rentals and apartments are a great way to generate
some passive income while keeping your assets in real estate. In
addition, some rental properties also provide great capital appreciation
over time.
You
need to be clear on your objectives so that you can put together a
buying strategy and select the right property type for your goals.
Buying a home for capital appreciation
·
Town
·
District
·
Road
·
Proximity to highway
·
Proximity to main road
·
Proximity to schools
·
Proximity to shops
·
Proximity to water (rivers/lakes/ponds/ocean)
·
Proximity to neighbors
·
Proximity to commuter transport
The single biggest factor in
the price of a home is the town in which it is located. Frequently the
homes in towns with good school systems will command a higher price.
Likewise, towns with a high per-capita income will tend to have more
large and expensive homes and thereby attract people wanting to live in
an upscale neighborhood. Although you will pay more for a house in a
high price neighborhood, the laws of supply and demand should continue
to work in your favor, ensuring your new home will go up in value more
than a better house at the same price in a less desirable neighborhood.
Town:
If you can afford it, select a desirable town where homes are already
selling at a premium. You are typically better off buying a mediocre
house in a highly desirable town than a great house in a less desirable
town.
District:
Every town will have more and less desirable districts. Ask your Home
Investor Specialist which areas of the town are the most desirable. If
possible, avoid the less desirable parts of town, even in the best
towns.
Road:
Some roads command a premium because they are highly desirable
neighborhoods. If this is the case in your town, you’ll probably see
quite a premium being asked for homes on these roads.
Proximity
to highway: many people want easy access to the highway but they don’t
want to hear it all the time.
Proximity
to main road: Homes on a busy main road are generally sold at a
lower price than homes on a quiet side road. Sometimes bargains can be
had if the home is on the corner of a main road and a side road; by
changing the location of the drive to the side road and by adding some
privacy fencing along the main road, the feel of a home can be
transformed.
Proximity
to schools: Most families with children want easy access to their
local schools without being on top of it. Buyers without children might
consider being close to a school a disadvantage. For the broadest
appeal, locations that are not too close but providing easy access are
ideal.
Proximity
to shops: Here again, not too close and not too far is best.
Proximity
to water: Any house with a water view will command a higher price.
On the edge of a river or lake will be of great appeal and oceanfront
property commands the highest prices. Small cottages on lakes can
sometimes be purchased at a low price and converted by tearing down the
old structure and building a new home from scratch or building a modular
home on the site.
Proximity
to neighbors: Buyers are divided on this; some people like not being
too close to their neighbors; preferring their privacy. Others like to
socialize with neighbors and want to have a friendly neighborhood for
the children to play in.
Proximity to
commuter transport: Around major cities commuting can be a problem.
Frequently buyers will look for easy access to commuter rail or bus
services. Find out how near local services are when looking at potential
property locations but be careful your new home is not located to near
the rail tracks! (That’s even worse than being near the highway).
When selecting your
new home, be sure to take into account the potential resale value to
others. If the home appears to be a bargain, there is quite often a
reason for its price based upon its location. Nothing makes a house
harder to sell for a good price than being in a bad location.
As
a rule, for the same money, you are better off buying the worst house
in the best possible neighborhood than you are buying the best house
in a less desirable neighborhood.
In a rising market,
prices will generally accelerate fastest in a desirable neighborhood.
Another rule for buying your own home: buy the most house you can
afford with the fewest frills, rather than a smaller house with all the
extras. You can always add many of the extras over time but increasing
the size of the home is very expensive relative to upgrading the
interior.
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