This article is about Investing In Real Estate Securities. If you have spare money and would like to invest in real estate and yet wish to remain isolated from the headaches related with buying, maintaining and selling of properties, then investing in various real estate securities can give you a high yield without worrying your head about it. Here are some available options.
Private Mortgage Notes: An experienced real estate investor can use these notes, which carry complete collateral, to purchase or rehabilitate either residential or commercial properties. Being asset based, the borrower’s credit is not a problem, since the property can generate enough income to pay the interest on the note and hence the note’s value is fully secured by the property’s value.
Partnerships in Real Estate Investments: You could go in for a partnership in companies, which are investing in real estate. That way, your liability will be limited only to the amount, which you have put in, but in case the property value goes up, you can earn a tidy margin and also receive tax benefits. The partnership might have one active partner, who makes all the decisions regarding investments and generally runs the show.
Real Estate Investment Trusts: These trusts are basically companies, whose job is to purchase and run real estate properties and generate income out of it. If properly managed, you can get decent dividends from the company and you can also expect long-term benefits as the properties appreciate in value.
Real Estate Mutual Funds: These companies identify and invest in companies involved in real estate in one form or another including in Real Estate Investment Trusts. They basically match their expertise to your money and invest in stocks of real estate companies. If their calculations are right, then you could get good dividends and in an appreciating market, the market value of your mutual funds could also go up substantially.
So, investing in any one or more of the above options can give you good returns, while keeping you afar from the risks connected with real estate.
If you are about to purchase any property, you need to punch in some figures in your calculator, so as to reach a figure, which is to be quoted to the seller. This will mean that you will have to first check out the rates in that neighborhood. That will provide you with a general market rate of that property, if it was in perfect condition.
Next you will have to check out the property and get it inspected for defects. This will give you an idea as to the total costs in fixing up the place up to your standards. This expense will have to be deducted from the market rate of that property. Any additional expenses, such as paying of any penalties or interest, your attorney’s fees, taxes, insurance, etc, will also need to be deducted from that amount.
In case you plan to sell the property, you will also have to deduct your profit margin from the remaining amount. Congratulations, you have just completed a real estate investing analysis by arriving at a figure, which can now be taken as your purchase cost.