imageBuying a House for Investment Purpose

Buying a House for Investment Purpose

19Jan 2010

There are two reasons why people usually buy homes: one is to have a primary residence and the other is for investment. When you buy a house for the second reason you have to do considerable amounts of research about how the value of the home will appreciate in the next few years.   Here are some tips you need to bear in mind in this regard.   1. Location: Invest in the location that you think will appreciate well in the future. The rate of appreciation determines the rental fee by which you can attract prospects. This can also provide you with a clearer view on how much you can stand to earn on the property. A wise decision on this aspect will also make your property less dependent on the vagaries of the real estate market.   2. Keep long term perspective: Just like mutual fund markets, even real estate investment has to be thought over from a long-term perspective. You may face rough weather for the next couple of years, but the rents will definitely appreciate if you are looking at a 7-10 year horizon.   3. Calculate the ownership cost:  You have to calculate the cost of owning and managing property and not just mortgage payments. Things like maintenance, repairs, insurance and property taxes have to be taken care of.   4. Pay attention to tax benefits:  Investment properties are a fantastic source of passive income. So make sure you work with your CA so that you are able to reap the amazing tax benefits too.

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