Property Investment

Investment properties are still a mainstay of the community. The community believes that an investment property does not know the word depreciation aka the selling price down. But still there is always an investment whose risks and weaknesses and advantages offered. In other words: high risk high return.

What to consider before deciding to invest in the field of property? The following advantages and disadvantages of investment properties.

Excess Investment Property

Value added
Value added investment property acquired in consequence of the development of building on top of an empty plot of land. The added value will be higher, if the building is centrally located with easy access and good facilities, as well as made with beautiful architecture.

The increase in annual income
From a piece of land being developed - a vacant lot into a house or shop house - an investor can receive rent. Another advantage is the increases in rental rates, because of the scarcity of land and property will continue to occur throughout the in a country continue to grow.

The increase in land values
The appreciation of the value of the land is another advantage of the investment property. The numbers of humans at any time continue to grow, while the number of land could not be increased. This is the classical theory which simple simply explains why land prices continue creeping up from time to time.

Long-term investments
Compared to the gold deposits, investments or other property has a durable character. Property business have a horizon (a period of) investment on average 3-5 years. That is, after 3-5 years of development its value enough means to generate capital gain. (difference between the buying price and the selling price).

The power levers high investment
For example, a property with the money you invest $ 1 million as a down payment (DP), then you can have an investment property for $ 5 million or five times as much, because the rest of the $ 4 million paid by using the financing bank.

If value of investments rose 10% to $ 5,5 million. The profit you $ 5 million (5,5 million -0,5 million) or 50% of the initial investment of $ 5 million. This is called the power levers high investment.

Protection against inflation 
Traditionally, people bought the land and buildings to keep the investment so as not to lose to inflation. This means that owners are sure to buy property, the value of the investment will not go down as the value of the currency inflation eroded. In fact due to the nature of their rarity, the value of that investment continues to increase over time.

Collateral is good
Unlike a financial investment, the property is the collateral or guarantees the most solid. Even in some countries, the banking does not hesitate to lend funds up to 80% of the value of the collateral.

Pride of ownership
Compared to other types of investments, the sense of pride towards property ownership is generally higher. Then the ancient times, landlords are associated as a rich man. This is because property can also generate income from rent.

The Weakness of Investment Property

Property Investment

Property bubble
It is characterized by skyrocketing housing prices due to increased demand and speculation. Like a hot air balloon that continues to widen, the demand stagnates and the oversupply will make property prices decrease. Kayaks that occur in the United States at medium 2006, which led to an economic recession and the global economy impose.

The cost of care and insurance
It also needs to maintain the values of its investments made are treated. A well-preserved house certainly would attract the interest of buyers and selling price jacked up. We also have to spend make buy insurance so that the property protected from the treat of fire or natural disaster, if the property was not insured can even reap the losses.

Large capital
Cannot be denied, property investment including investment capital intensive aka eat large capital. Through preparation is required before entering into property business so that finance is not eroded.

A strategic site selection is very crucial in property business. If the site belongs to the distant and less strategic, may we would experience difficulties in the property market. Before starting to invest the money of course we have to learn the current location and the first projections in the next few years.

The quality is declining 
This relates to the second point. As man-made goods, the quality definitely would decline over time. Property investment demanding oversight of the quality of the material is good. If there are, the beginning of the building materials used does not meet the standards of a decent, not impossible within a few years many damage occurred.

Transaction costs
Property investment is not just a matter of buying and selling price only. You should also look at other cost such as the cost of the notary fees, permits and management letters, and others.

A long period of time
Property investment is long-term investment; the investment is also not liquidating other investment types. In order that the return earned high, most not home can be sold in the next five years. Don't sell like hotcakes, selling a home requires time and negotiation process

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