Article Sphere Logo

Three Ways To Maximise Your ROI When Purchasing Investment Property - Part 1

By Expert Author: Joel Teo | Article Abstract
Word Count: 445 words | Views: 72 view(s)
Property Investment is one of the oldest forms of wealth accumulation and should always be part of a larger portfolio of investments so as to balance out your risk. However, unlike other paper securities, the financial value of a house or for that matter any other investment property does not vary very much. Granted it may increase slightly over time or drop a little during a property slump, but this is marginal. That is why banks over time created a separate type of loan for real estate as opposed to other forms of movable chattels and this is the mortgage. This article series will highlight for you three ways to make more money and maximise your return on investment (ROI) when purchasing your property.

The first method is for you to increase your ROI by using leverage from the bank. When you purchase with your own money and then use the bank's money to pay for the rest of a property, the return on investment would be the total cash flow minus the interest paid out to the bank and this would trump purchasing the property merely using your own money. So in other words, your return on investment would increase because you are in effect using less money to make more profit and this is the basis of the concept of financial leverage in real estate investing.

A separate spin on this idea is for you to always divide up your initial capital into several lots and purchase several plots of property at the same time and generate several cash flows from your property investment. Note that while doing this, always have an eye out for which part of the property cycle you are purchasing in. If you purchase a property during the rental boom years, there is a chance that your cash flow calculations might not hold during a downturn in the economy, thus always take a more conservative outlook to your cash flow calculations.

In conclusion, using financial leverage from a mortgage can be used as a way to increase your return on investment. However, mortgages are complex instruments and the best way for you to get the best deal is to find a mortgage broker who can then do the maths and determine the best mortgage for your particular property investment. Remember its not how much you make in gross from your rental property, but how much you get to keep after taxes and interest payment that is key to making money from property investment. This is a three part series and we will continue in the next article on how to buy a property at a bargain and boost your property investment ROI.
Joel Teo

About the Author/Author Bio

Joel Teo is the author of this three part investment property series. You can find Part II of this investment property series at the investment property series article 2 and http://www.realestateinvestment101.info

Article Source: http://www.articlesphere.com/Article/Three-Ways-To-Maximise-Your-ROI-When-Purchasing-Investment-Property---Part-1/30502

Article Submitted: 2006-05-31 | This Article has been viewed 72 times.

Rate Article

Related Videos

Be a hands-off landlord
How to Make More Money - Real Estate Investment Education
Rick otton uncovers new strategies property investment
How To Invest In Real Estate
How to Understand Property Taxes
 

More "Real Estate Investing" Related Articles

 
 

Listed below are more articles related to the above article from the "Real Estate Investing" article category.

People interested in the above article "Three Ways To Maximise Your ROI When Purchasing Investment Property - Part 1" are also interested in the related articles listed below:

 
Excessive debt is one of the largest factors contributing to the lack of success that many real estate investors have when they are first starting out. Because so many Americans are plagued by debt, it seems normal, natural, and expected, but if you can whittle away at that debt in a responsible way, you just might find that many of the obstacles preventing you from becoming the investor you hope to become could be eliminated - in some cases overnight.
It's a good idea to invest in real estate as soon as possible, and bank owned homes are the perfect way for new buyers to purchase property. Buying rather than renting ensures that you use your money to build up your finances, instead of just making your landlord wealthy. Many first-time homebuyers put off buying a new home, however, because they worry about the expense or the hassle, but bank owned homes offer low risk and good savings. Fixer upper REO homes are especially a good option.
Missed the Mexico Real Estate bus in the year 2009? Year 2010 is approaching fast. After a rollercoaster ride in 2009, what does the year 2010 holds for Mexico Real Estate...
Due to the instability of the economy at present, there are many home buyers looking for an opportunity to buy a house that can help them pay for their mortgage. These buyers are looking for types of homes which may be in need of renovations and include more space than you need yourself so that you can rent out a room or a suite. Renting out part of your new home can be a great way to help pay for your mortgage and renovations.
Residential foreclosures are residential houses - often single family homes - which has been repossessed because a previous homeowner has defaulted on a home loan or other obligation. These foreclosures are offered for sale by lenders and the government for less than their actual market value. This is because lenders want to recoup their money and the government is not interested in holding and managing these properties. If you want to buy a home, residential foreclosures are one of the smartest ways to buy.
If you are buying foreclosure homes for sale, you will want to save time where possible. After all, you want ensure that you have plenty of time for all aspects of the foreclosure buying process and you want the process to go smoothly and quickly. Saving time is also important when you are buying foreclosure homes for sale because foreclosures tend to sell quickly. Saving time and avoiding delays can ensure that you can take advantage of the best opportunities possible.
If you are looking to buy luxury real estate in a particular area, make sure that you research agents first to make sure that you hire someone who you can work with who has a specialty in luxury real estate sales. As with regular home buying, make sure that you have all your ducks in a row in regards to financing; a pre-approved mortgage is always a good idea when you're actively looking at new homes.
 
Article Directory Home All Categories Real Estate Real Estate Investing
 

Can't find what you're looking for? Try Google Search!
 
Copyright © 2005 - by Larry Lim, Singapore - Article Search Engine Directory at ArticleSphere.com™
All Rights Reserved Worldwide. All Trademarks and Servicemarks are the property of the respective owners.

Afrikaans Albanian Arabic Belarusian Bulgarian Catalan Chinese (Simplified) Chinese (Traditional) Croatian Czech Danish German English Estonian Filipino Finnish French Galician Greek Hebrew Hindi Hungarian Icelandic Indonesian Irish Italiano Japanese Korean Latvian Lithuanian Macedonian Malay Maltese Dutch Norwegian Persian Polish Portuguese Romanian Russian Serbian Slovak Slovenian Spanish Swahili Swedish Thai Turkish Ukrainian Vietnamese Welsh Yiddish