This guest post has been kindly provided by Peter Smith and PropertyTurkey.com.
Property has always had the potential to provide a good return and this does not need to be just in the long term. It offers a solid investment opportunity and can provide an attractive alternative to the traditional retirement funds. It can also be used alongside these to create an extremely comfortable retirement. There are a variety of ways in which you can generate wealth in the short and long term by investing in property:
Leverage
Purchasing property does not require you to have all the capital up front; you can borrow a large proportion of the price. This means that a small amount of funds can still assist you with buying a property and obtaining either an income from the rent collected, a profit from quickly reselling the house for more or holding onto it until the finance is paid off and you can generate either a significant income or sell for far more than you paid for it.
Tax Free
It is possible to buy and then sell your property and benefit from a variety of tax reliefs in the process. By offsetting expenses against the rental income you can even make a loss on paper and use this to offset your main tax bill; legally increasing your disposable income. It is best to speak to a tax advisor before deciding a course of action.
Retirement
It can be very difficult to save for retirement; even if you have the best intentions and understand the need for a good retirement fund it can be difficult to actually save the funds each month. Real estate investment provides an opportunity to commit a monthly figure to a savings vessel and force yourself to build a retirement fund. Property investment can also be addictive and you may start to purchase more properties which will help build either your long term or short term cash reserves. The commitment to this type of investment will provide you with a retirement fund for which you will be grateful for in the future!
There are several important guidelines which you should be aware of before you start investing in property:
- Price is not the best guide. An expensive property is unlikely to generate enough cash return to justify your investment or even to meet your monthly expenses. This is because they appeal to only a select few; this ensures it becomes a buyer’s market and the competition can make it difficult to attract the right tenant. Properties which appeal to your average working family will always be in demand and have a much better rate of return on your investment.
- Build your wealth slowly if you are aiming for retirement. It is essential to know why you wish to invest in real estate. If it is to generate a good retirement income then you should take your time and build your portfolio slowly; making sure each opportunity is truly viable before you commit. However, if you are after short term wealth you will need to look for properties which are ripe for flipping and finance deals which do not have any repayment penalties.
- Niche Purchasing. It is far easier to know everything about one niche than it is to learn all the secrets of the real estate industry. By focusing on one specific sector you will meet like-minded people and be able to utilize their knowledge to help your own investments. You should remain professional at all times.
- There are a variety of finance options available to the real estate investor and you should consider all the options available to you. Using finance can help you to purchase more properties and increase your long term wealth or allow you to fund the redevelopment of a property. Some finance options may even provide more profit than simply purchasing the property with cash.
In order to build wealth it is essential to retain your property. Building wealth and a retirement income can only be achieved by holding on to the property for the long term; unless you have decided to focus on flipping. Make sensible decisions and you’ll have the highest chances of witnessing sweet returns in the long-term.