Return on investment is a crucial analytical tool used by both businesses and investors and it’s a key concept for any investor to understand. ROI answers the question “how much will I get back per dollar I invest?” Real estate investments are one of the most secure types of investing nowadays. We all know that stocks and bonds can be badly affected by recessions, as we had experienced during 2008.
Owning rental property has been a popular investment for many over the years. The difference between an investment property and your own home is that you earn an income from it. You can earn profit in real estate in either of three methods: acquiring, selling, and renting it out.
With regards to “where” your properties should be located, there are some factors to consider. Basically what you have to consider about it would be the type of property that you have, its size and how much you manage the property.
WHAT TYPE OF PROPERTY SHOULD YOU PUT YOUR INVESTMENT ON?
Commercial leasing spaces such as office and warehouse units, or should you choose to buy an apartment? As far as cash flow is concerned the best property to buy would be apartment buildings. There are several factors which makes it the best property to acquire and not something else.
SELL OR RENT OUT?
For you to decide on whether you should let your property be rented or sold out in the market, you should carefully think over some factors which can directly affect on how your property will perform in the market in the near future.
If you are thinking of making profits by selling, you should think about making more than what your purchase price has been. Is the market selling properties of the same type at a higher price than what you have originally paid for it? Or will the difference be only a small margin? Do not be hasty in making decisions over selling a property.
If you choose to rent the property out, think of the monthly cash flow and the monthly payments that you would need to do for the investment loan that you have made. If there is also only a small amount of margin between the extra profit that you can get out of these deductions then you should think twice about renting the property out.
Also try to think about the future of the area where it is located. Will it be a good commercial area or residential area? Will it attract future tenants to the place or would it be better off as a private property? These are things that you would have to consider before choosing to rent or sell your property out.