Posts Tagged ‘Investment’

Different Types of Real Estate Investments

Wednesday, July 18th, 2012

There are several different types of real estate investments and it is important to understand what each type of investment is and what the benefits and risks involved are. The types of investments that involve real estate include Real Estate Investment Trusts which are also known as REITs, real estate partnerships, vacation rental property, rental property, and raw land investments. Each of these real estate investment types has its own advantages and disadvantages.

1. Residential Property Investing

Residential real estate can be used as rental properties or placed for sale. Many investors are offering creative finance strategies to attract buyers who cannot qualify for bank financing. Popular financing options include lease purchase option agreements and seller carry back mortgages.

2. Property Trusts

This method requires the least amount of capital to invest. Shares or units in the trusts are usually purchased and this entitles the investor to regular dividends as well as possible capital growth later on. The investor does not actually own the physical property.

3. Commercial Property Investing

Commercial property has the potential to generate substantial profits as long as investors evaluate market conditions. Investors may be entitled to tax incentives when commercial investments bring employment opportunities to the area or when properties are upgraded using energy-efficient technology such as solar panels or other forms of green energy.

4. Repossessed Property

Property (Residential or Commercial) can be purchased through Mortgagee auctions or sales. Usually, the previous owner has come under financial stress or hardship and unable to meet their obligations to repay the debt. Therefore, the lender has repossessed the property from them and is now selling it to recover the outstanding balance.

5. Property Developer

The top of the food chain is the Property Developer. They start with a piece of land and develop it into a Residential or Commercial Property, which they can completely sell or rent out. This is where the most profit can be made out of all the types of investing.

Real Estate Investment – Profiting from Overseas Property Investment

Friday, April 16th, 2010

Smart investors know that overseas property investments can yield 25-100 % returns if properly managed. One intelligent measurement to lower risks is to lock in the the value of the investment property with the help of third parties so that if the value goes down you will be able to sell the property to them and not loose a penny.

An example would be buying a international property, if you pay 80K and the market value falls to 50K, having locked it’s value through a third party you can still sell it for the original 80K, now if on the other hand the property appraises at a value much higher than what it was originally purchased for, all you loose is a small lock in payment but made a substantial profit.

This is a different way of investing compared to other markets, as you may be able to deduct the advantage is that you are able to lock in “the risk” at a set level in exchange for a small payment which represents the maximum loss you are willing to take. This way overseas property investors have a high leverage when investing in foreign real estate.

The best way to invest in foreign real estate listings is to select an established or “currently in development” market, as well as making sure that the laws in such places are favorable to foreign investors. Good investment markets which fulfill these conditions are Dubai and Cyprus.

Cyprus property can be obtained after completing a “permission to purchase” application with the Council of Ministers. This is a step every foreign investor must complete, in order to purchase property in Cyprus which is not very restrictive. An investor can purchase up to four thousand square meters of land and an additional house or apartment.

Similarly, buying Dubai property offers many advantages due to the fact that real estate prices keep increasing because of the high demand these properties have. The demand increased radically back in 2002 when the crown Prince made an announcement which allowed foreign investors to purchase property. Due to local tax and business advantages this particular market blossomed and it’s now a great place to develop any business idea.

Real estate investments in foreign countries offer great ROI “if and only if” the investor verifies local laws pertaining to properties and business.

Always remember to diversify your investments, even if you are investing in a relatively stable market.