|Real Estate Information|
Why You Should Invest In Real Estate
Why real estate, or why property, some people ask when looking for an investment. Well, as far as I am concerned, real estate/property investment is, and always has been, the most powerful type of investment for building wealth. It has been said that over 90% of the worlds millionaires got there by owning property. The reason property is such a powerful way to build wealth is due to one key concept: leverage.
Once I realised this, I didnt look back. Now if you are an experienced investor this may be obvious, but for the benefit of those who havent seen the light, let me explain ... Leverage is your ability to magnify your returns by using other peoples money in this case, its usually the banks money.
To give a clear example, say you have £20,000 to invest. This can be a lump sum or by releasing equity in your main residency.
So what is the best way of investing this money
Stick it in your local bank - by some considered the safest option, "at least you cant lose it, and you get some guaranteed increase in value" usually goes the argument.
Money in the Bank - assumed return: 4%
As you can see, after 10 years, youve made virtually no progress at all, especially when you consider the effects of tax and inflation.
Option 2 Stocks and Shares
Now over the last 10 years, although admittedly not in last 4 years, the stock market has been very popular. However I cannot accept it is a better bet. When I read that the stock market is a better bet over the next 2 years as will go up by 15% a year, as opposed to the property market that may go up by 5% a year this does not take leverage into account and so paints a very distorted picture!!
And I will show you why. Its hard to say what sort of return you might get on the stockmarket, but lets say you get 12% a year for the next 10 years - very unlikely, but lets just go with this. So if you could beat the odds and get a 12% return every year ......
Money in the Stockmarket - assumed return: 12%
Now that’s a big increase on sticking the money in the bank, but clearly is not guaranteed. But can you do better I think you know what I’m going to say!
Option 3 Property
One of the great things about property is it enables you to leverage the 20,000 to purchase a 100,000 investment property in other words, borrow the remaining 80,000 from the bank. Now say the property market slows down to an average of only 6% return for the next 10 years. This would probably be a fair estimate in the UK, although there are plenty of markets which are growing more rapidly, lets concentrate on UK for this example.
Money in Property - assumed return: 6%
Make sense So you make 6% increase on the full value of the property, not just the £20,000 which you initially had. This is the power of leverage. In effect you have increased your initial investment 5 fold in 10 years! So even if the stock market increases by twice as much per annum as the property market over the next 10 years, you can make far more money from property.
Now for simplification, I have not included lawyers’ fees, agents’ fees or stamp duty. Admittedly buying a property has more additional costs than buying shares, but this would not make a significant difference on your profits - around 4% in the UK, higher overseas.
One thing to point out is that in the short term you have greatly increased your potential loss i.e. if the property went down by 10% in value, you would lose more of your initial investment, because the property value would go down to £90,000, you still owe the bank £80,000, so you now have £10,000. In comparison if the stock market dropped by 10%, your investment would be worth £18,000, as only lose 10% of £20,000.
However over a length of time, using leverage to good effect and using all the other skills you need when buying property, property is by far the best investment, for the majority of individuals.
The figures I have used have been very conservative, many individuals are making far more than this on property, whereas anyone making the same returns on the stock market, will generally be benefiting from some sort of insider dealing or be very high up in the company, I would imagine!
How to Choose the Proper Entity for Your Business
First, let me state that Im not an attorney and the rest of this article is just based on my experiences so Id advise you to contact John Hyre at www.realestatetaxlaw.com to get some solid, specific advice on your particular situation.
A Balancing Act: How To Properly Organize Your Checkbook
With all the things you have to remember to do on a regular basis, balancing your checkbook doesnt always receive priority. But if you plan ahead and schedule some time for this important task, you will reap the financial rewards.
Juggling The Day With A Deal
Doing deals with sellers is why you went into lease purchasing. Again, using organization and time management is very important here.
Writing a Press Release
When dealing with "this-just-in" type information, it is important to understand how to write a head-turning press release. A press release must contain substantial information that you consider to be newsworthy and substantial. Relate the news to the audience. Spell out for them WHY it is newsworthy and why they should read on. First describe your news, and THEN tell who said it, etc. Remember that the first ten words in your press release are the attention-getters, thus should be effective. Use what journalists refer to as plain-style language, not fancy words or lots of adjectives. Stick to the facts; avoid fluff. Provide plenty of contact information the name, phone numbers, fax etc. for the person with the most information about the story to make it as easy as possible for the media to do their job!
5% Down Vs. 10% Down - A Comparison
It has always been an issue for home buyers to save their down payment. Many people, on advice from various people wait to save 10%, rather than moving into the home sooner with 5% as a down payment This is not always a good idea. Let me explain;
Do You Have A Press Package
How do you make a friend of the media A press package can go a long way in helping you deal with the media. It allows you to have everything you need handy.
To Buy or Rent For Your College Student
September always means Back To School, and for thousands of families it also signals Off To College. In addition, more and more young people are opting to continue their education with post-graduate studies.
Preparing a Budget
Ok, you say, I know I need a budget, but how do I prepare one The most common budget period is one year, but this can vary depending on whether or not your business has seasonal or cyclical fluctuations. For example if you run a Christmas decorations shop, or a costume shop your business is going to peak during certain times of the year.
Website Promotional Consideration
Promoting a Website is becoming tough. For many, problems are seen at the beginning, when attempting to register a domain name. Once a satisfactory domain name is acquired, the site is lost within a see of competition. Time and money is required to excel above the competition. Along with these common suggestions, there are five areas to consider when promoting a Website.
Mortgage Prepayment Penalties - Just Say No
One of the most common terms found in a new home loan is a prepayment penalty. This type of penalty says that if the borrower pays off the loan early, commonly during the first five years of the loan, then the borrower will be responsible for paying an additional amount of money, typically about six months interest on 80% of the mortgage balance. Sub-prime market loans will typically carry prepayment penalties more than standard mortgage loans.
What is the Difference Between a Power Of Attorney and a Guardianship Which is Appropriate for Someone With Alzheimer’s
A power of attorney is a legal document in which one person the principal authorizes another the agent to act on his/her behalf. Financial powers of attorney allow your agent to make decisions regarding your property. Healthcare powers of attorney allow your agent to make decisions regarding your health care needs.
Simple Solution for Php Includes - IFrames
I have recently created my first Php program. I wanted to share with others some of the problems that I encountered, and how I finally overcame these obstacles.
Four Tips For Getting More Mileage From Your Articles
It has become common knowledge that the smartest and most effective free method of advertising your business and services is to write and submit articles to the over 400,000 e-zines currently on the net.There are even several e-books written on the topic, including mine, that will help you take advantage of this effective technique.What do you do next after youve invested the hours necessary to research, write, proofread, edit and submit your article to thousands of e-zine publishers
Building Your Online Portfolio
So you want to start earning online and have invested some of your hard earned cash in a couple of online programs but have you really thought about what you are investing in.
How To Get New Business
Market, Market and then market some more. So many small and home-business owners do what we call spot marketing. They market hard for their business, get a response then stop marketing.
What Is A Mission Statement
In order to do your mission statement you need to be able to answer the following:
Paralysis By Analysis
Every day we get emails and telephone calls from people who want to get started in Real Estate. We hear, I am just checking out your program. Or, I’ve been researching for the past six months to try and find a program. While researching and checking out programs is an important step, so many of these individuals never follow through to the next step, which is getting started and moving forward.
What is Bridging Finance
Once you understand what the term, “Bridging Finance” means, it’s easy to understand how it got its name.The purpose of a bridging or bridge loan is to provide short term cash for a real estate transaction until permanent financing is secured.Bridge loans are commonly used to “bridge the cash gap” when completing commercial real estate transactions.
How To Simplify Your Real Estate Buying/Selling Experience
Today’s real estate consumer has a lot to consider during the sale or purchase of a home.Be it waiting for the right buyer/seller, mortgage rates, or the moving truck, the experience can take a bit of patience on the part of the consumer.With this in mind, it is incumbent upon real estate brokers/agents/firms to institute services that will the buying/selling process hassle-free.
Credit Establishment 101
There will come a day when you need credit. You may want to buy a home or a car and your credit rating will become very important to help make these dreams come true. One of the first things you will need to learn is the basic principle of money management, especially the ability to repay your creditors on time within the 30-day grace period they establish for you. Most people secure credit cards as the first way to establish credit in High School or College. Upon getting the credit card, usually a low spending limit, the ability to repay the card in an orderly fashion will help you establish a positive credit rating with the major repositories.
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