Real estate or bricks and mortar to use an old phrase, has proven over decades to be an investment sector with profitable returns over time.
As with any investment, there are boom times as well as times where things are not so good due to factors affecting the economy.
Understanding the language used in real estate investment is crucial when making decisions that can affect your return.
Terms such as lease option or rent to own are two terms that are powerful investment strategies. What are the advantages of foreclosure?
Knowing these terms and understanding their potential for maximum returns will be crucial to your real estate investment experience.
You may have been exposed to marketing that espouses the ease at which you can get rich quick in property. This may entice you to get involved in real estate market, but bear in mind that property is an investment vehicle which increases in value steadily and if you’re not prepared for the long journey to profitability, you would be best advised to look at other income opportunities.
Now, a further explanation to the above real estate terms.
When looking to invest in property, most people opt for the residential niche – single dwelling houses, flats, apartments, condominiums, cottages.
But, if you’re prepared to get into property rentals, commercial buildings can also be equally as profitable.
Lease options are more common when investing in commercial property and is essentially a try before you buy option.
You can lease the building for a short term and after an agreed time if the lease proves profitable, you can execute the lease option and purchase the property.
The lease should only be executed if the property fits into your investment portfolio strategy for future revenues.
Rent to own may suit you if you have a residential investment property which you plan to sell on after a short period of time for a profit.
The rent to own option may fit both you as an investor and the tenant looking to get on the first rung of the property ladder.
With the rent to own approach, the investor gets rental income for the duration of the lease period, and have the option of selling to a ready buyer – the tenant – without the headache of having to find an agent and putting the house on the market.
The tenant will, of course, prove to be an assured buyer and they have an attachment to purchase.