Investing in real estate is a complex task which requires a lot of things to be considered, and that too very well indeed. Investing in real estate involves holding and acquiring, buying and selling of property rights and at the same time expect to utilize the returns of the prospective projects acquired in the future to the maximum. Therefore, return on your investment should be the prime concern when you invest in a property. You may know that investing in real estate is a bit different from investment in other things and there are many factors involved in it as compared with other investments. You can read various related articles on the investing in real estate written by Robbie Rothenberg.
It is true that investment as such has its risk of losing it anytime, but investment in real estate happens to be a stable one if you handle and manage your investment properly. It can also generate you large profit as the value of real estate ever increases. But there are several social and economic factors that are to be considered while investing. You have to check out the behavior of the market, location of the property, population in the area of location, rate of inflation, stability in the rate of interest of mortgage, history of the land and its appreciation, and much more.
If you put aside the leverage aspect of it, investing in real estate can give you lots of benefits as well. You get the benefit of taxation, cash flow after tax on the sale, yearly dividends from after-tax cash flows, build up your equity due to asset appreciation and much more. Apart from the monetary point of view, there are other benefits as well. You get a sense of pride in home ownership; feel secure to have a place to stay on your own, as well as diversification of the portfolio. But it requires a considerable amount of capital to invest in real estate and also requires a strategic and proper management of it as well.
One important part of the investment in real estate is that you must never invest based on emotional attachments. You must treat it as another business which will give you a large amount of profit in return. There are few factors which if you consider will help you to make an informed decision and to find out whether a property is worth for holding, selling or buying. The cash flow is the most important factor which is determined by deducting all the debts and expenses from the income generated from it.
Consider also the rate of appreciation of the property over time and you can do that by deducting the purchase price of the property from the selling price at a specific time. If you can sell more then, it would automatically increase the value of the property. Consider also the loan amortization to generate better equity with the help of the intermittent loan reduction at a particular time. It is required as the income stream is considered while assessing the value of any property before you make an investment.