By Vipin Agnihotri
Investing in income property is a smart gambit provided you are an adept on the realty roller coaster. Before we move on, remember the point that buying income property is totally different from buying a house. It is worth mentioning that home buyers make plenty of personal choices about the floor plan and the neighborhood.
On the flip side, income property is supposed to provide a return on your investment. In part, the worth of income property is based on the economic principle of anticipation, which states that value is created by the expectation of future benefits. Additionally, one can simply buy and hold an income property assuming it has positive cash flow.
In my opinion, income property pays you back in two ways. First and foremost, it produces rent. Secondly, income property pays you back when you sell it. Theoretically speaking, the value of income property can be defined as the present worth of all rights to these future benefits.
The pivotal factor here is that there are no magic numbers for estimating the value of income property. No one will argue with the fact that you can learn a great deal from the sales and listing history of a property. Your property dealer can play a prominent part in this regard.
More often, when a property is fully occupied with stable long-term tenants, you know how much income you can expect. Because of this, there is hardly a surprise that fully occupied properties normally have a higher value as compared to vacant ones.
As you already know, real estate markets are rarely in balance because supply seldom equals demand. Instead, it has been noticed that the market is either oversupplied or undersupplied. In other words, real estate follows a cycle of boom and bust just like the stock market. It is pretty much straightforward that everyone would like to buy at the bottom of the market and sell at the top.
But the fact of the matter is that it’s almost impossible to predict the top or bottom of any market. However, it’s much simpler to observe present market conditions and trends. Some kinds of income properties belong to special real estate markets, which transcend the local economy. For example, motels and golf courses may be affected by regional, national and even global trends in leisure time and disposable income.
Suggested Reading:
0 comments:
Post a Comment