Real estate investment has for a long time been the preserve of the affluent. Today however, the financial industry has come a long way in making it possible for a wider demographic of people to not only buy their own homes, but also make other property investments. The increased access to loan facilities has enabled many more people in lower income groups to make the same lucrative investments. Many people have come to realize the benefits of owning secondary properties that not only help provide them with secondary income, but also make considerable capital gains in the future when property prices have risen further.
When choosing a property investment, a person needs to look at the potential returns that will be earned. Ideally the monthly net return should be positive. A positively geared property will ensure a high enough rental income that will adequately cover all property costs and still leave the investor with good monthly net income. This means additional income to the investor that he or she can use to further reduce the cost of borrowing by paying more than the required loan installment. A negatively geared property is the opposite and does not generate enough income to cover property expenses. As a result, the investor must make up the shortfall from other incomes to cover the property costs.
Another angle at which an investor can expect to make positive returns is by investing in positive cash flow property. Such a property may not provide a high rental income, but by virtue of the kind of property it is, may be entitled to tax breaks that make for a good net income. It is advisable to consult an accountant and make the necessary inquiries to know the level of tax breaks you can expect. Some positively geared properties may also be entitled to tax breaks making it worthwhile to consult an expert.
The current economic conditions have made it difficult for investors to raise sufficient funds to make property investments. However with so many varied properties for sale, almost any serious and capable investor has the opportunity to get into the market. Many people have had to give up their homes as they became unable to meet the property costs. As a result many individuals and families have moved from their mortgaged properties to rental housing. This and the continued influx to people to the cities and towns, is providing a healthy market for real estate investors.