Property

Pros and Cons of Owning an Investment Property

Becoming involved in the property market is an exciting venture for budding investors, who wish to accommodate their funds into properties that deliver on continual growth, expansion and opportunities for large returns. Hopes of wealth are a common trait among enthusiasts and are often viewed as the safest and most accessible investment among like-minded peers.

Many positives and potential downsides exist in the fluctuating market of real estate, but with educated advice and careful research, investing into the property market holds large rewards for those willing to do the homework first.

Property

Pros

Real estate investment, in most cases, guarantees the potential for capital growth in both commercial and housing establishments. The value of a property will inevitably rise over time, regardless of the overall quality of the property itself. Value is rewarded to longevity and regular maintenance on a property, along with the prospect of tenants providing monthly rent into your account. This instant return system allows for investors to steadily gain capital, as long as they upkeep regular maintenance on the given property itself.

The location of the housing market can help investors score a better deal in securing a good property, whether it’s looking at villas for sale in Turkey or housing in the American suburbs, the options are potentially endless.

Investing in real estate is often viewed as a safe business venture. The low risk of entering the market coincides with the natural gain of capital that simply relies on time and the fluctuating market to dictate the value of a property. Even a house in a poor location or condition can benefit from capital gain, which is great news for those weary of taking the risk.

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In the event of theft, fire or damage incurred by troublesome tenants, the low risk aspect still applies to the housing market, given that insurance options are available to protect a person’s assets. Broken leases and, particularly, severe property damage can be treated through taking out funds of a tenants bond in order to recuperate the costs to fix it.

Real estate investment enables investors to maintain a significant level of control during the lifetime of the property, with many options available in terms of maintaining the flow of returns and other important decisions that may need to be made.

Tax benefits also exist for investors, particularly properties that may experience negative gearing. Tax departments recognize these aspects and configure returns accordingly based on these scenarios.

Cons

Selling one’s property can be a lengthy and demanding task for some investors. If a tenant breaks their lease, has become undesired among the market or the property is no longer considered financially viable (on par with an individual’s needs), then selling can be very time consuming.

If a house or commercial property remains empty during the process of selling, investors are still required to maintain them, without the added benefit of receiving rent from anyone.

Selling may require preparation for an auction, which involves hiring valuators to assess the property and perform any repairs/renovations that may be required.

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Ongoing costs are another considerable factor when deciding to invest in property. Initial fees such as stamp duty, legal fees and deposits, can gradually pile up during the investing process. Regular maintenance requirements are also commonplace, with small fixes and repairs regularly occurring during a tenants stay in a property. Other notable factors consist of landlord insurance, building fees, council rates, land tax and water rates, to name a few. In comparison, investments such as shares do not have the same ongoing costs that real estate does.

 

Tenants that become problematic during their stay may become draining, both emotionally and financially. Disputes such as undesired living conditions or rent increases can produce bad relationships between the investor and occupants. Issues with the inability to pay rent may also arise, which may hinder the financial return on your investment. Such disputes, depending on how serious, may result in legal action and cause serious problems relating to time and money.

Tips to Help you Decide Whether to Pay down Debt or Invest

It has become a sad but undeniable fact that more and more people are struggling with debt. Most people have mortgages, credit card debts, personal loans and maybe more. If they are lucky enough to have a good income they may be managing to tread water. The reasonable approach is to pay down your debt as quickly as possible. However, sometimes you may actually end up better off by continuing to make minimum payments on your debt and investing any spare cash. The following tips will help you to decide which the best option for you is. Organize your budget The first step must be to draw up your budget. List every item you spend money on and every piece of income you have. You will not be able to consider investing surplus funds if you do not have any. You must include your minimum payments for any loans you have. Have some emergency cash stashed Assuming your budget shows some spare cash then it is imperative to create an emergency fund. Ideally you need to have enough funds put aside to live on for at least three months should the unexpected happen. The funds need to be accessible although there is no reason they cannot be in something like a money market fund. Debt can be an investment! When you pay part of your debt down it means you will no longer have to pay interest on that amount. This could mean the $10 interest payment you make monthly or a much bigger, one off sum. By paying part of your debt off you are saving yourself future money which can be seen as a good return on your investment. Prioritize There are those who suggest you organize your debts by interest rate and pay those with the highest rate first. Whilst this can work it can often be better to organize them by size.  Pay the smallest off first. This will release funds to pay the larger ones and will help you to feel you are achieving something. Make a comparison – paying debt vs. investing Before undertaking any investment you will need to compare the potential return from this investment against the amount of interest charges you will save by paying a fixed sum off from your loan. Whichever has the higher rate of return is the better route to take. For example, if your mortgage has a 5% interest rate but you can invest in a bond that pays 7% you are better with the bond. Paying $100 off your mortgage will save you $5 but the bond will pay you $7. Is property investment a good idea when you’re trying to pay off debt? It might be. For example, your current mortgage shouldn’t be seen a bad debt. Providing that you have a positive credit score, you have the highest chances of see high returns on your investment. In this case, after tax returns may be higher than after tax debt costs of mortgage. Before spending money on new property and diversifying your portfolio, it might be a good idea to check the market. Explore web and opt for websites like Property Turkey in case US real estate market is not seem to be appealing. Watch out for taxes Alongside calculating the better return you will need to consider your tax position. If the investment will be liable for tax this will reduce your rate of return and may make it less beneficial than paying a sum of your loan. Equally the loan payment might be able to be deducted from your taxes. Paying debts with high interest rates By now you should have drawn up a list of your debts and know what interest rate applies to all of them. You will then be able to decide which one to pay down based on the interest you can get from your investments. Any debt which has a higher interest rate than you can obtain as a return from investment should be targeted first. Invest with caution Investment values can go up and down. This means it is essential to invest with caution and only put your money into safe investments which you can be fairly sure will bring a better rate of return than your debt interest charge. If you are able to locate investment opportunities like this then it will make sense to invest instead of paying down your debts.  A final consideration should be given to your credit rating and whether you may need to borrow again. If you have a lot of credit then it may be better to pay some down as any further credit will come at a higher interest rate. Have you made a decision yet? Would you rather pay off your debt or invest the money you have available to help you pay that debt and still some money left? Regardless of your choice, make sure you don’t forget that making an investment comes with certainly risks you have to assume to increase productivity.

Seven Top Tips to Help Navigate Most Common Pitfalls of Wine Investment

If you have some spare cash and are looking to build your investment portfolio then you may wish to consider fine wine investment. Studies have shown it has consistently provided a good return on investment.  Pick the right wine and you could be looking at a very comfortable, early retirement. The following seven tips will assist you in avoiding most pitfalls.

1.      Limit your investment

Expert opinion suggests that you need to have minimum of £10,000 before looking to enter the fine wine market. It is essential that you only invest with money you can afford to lose. Although this area of the market has done very well over the last twenty years it is possible to lose your money. Fine wine investment needs a medium term outlook and you may not easily be able to convert your asset back into cash. Wine remains a good investment as the demand for it is steadily increasing whilst availability is not.

2.      Buy the best

This is one of those times in life that it really does pay to buy the best possible. History has proved that the best quality wines; such as first growth Bordeaux or the top Rhone’s and Burgundy’s, have been excellent for return on investment over the last five to ten years. You will receive better returns by having a small quantity of the best wines than a large quantity of cheaper wine.

3.      Prices

As with any purchase it is vital to check the various suppliers before you buy anything. It may be surprising just how variation there can be in the price; a 20% difference is not uncommon. There are a variety of websites which will provide information on current wine prices and these can be invaluable.

4.      Time is money

Past performance of fine wines has shown a consistent good return on investment every five years. This means you should plan to invest for a minimum of five years to ensure you maximize your potential profits. Fine wines are produced in relatively small quantities and many of these are actually drunk! In the majority of cases, five years is the minimum amount of time it will take for the availability of these wines to reduce significantly.  At this point those who do still have these wines in stock will be able to command the best prices.

5.      Storage conditions matter the most

Fine wine can deteriorate if not stored correctly and, if this is the case the value will definitely decrease. It is essential to buy unmixed sealed cases and then store them in a bonded warehouse. A bonded warehouse has exactly the right temperature and humidity conditions to allow the fine wine to taste as good, if not better than when it was bottled. Two important notes to make regarding storing in a UK bonded warehouse are that there is no VAT due until the goods leave the warehouse and that you must have adequate insurance for the stock in your own name.

6.      En primeur wines

This is the name given to a wine which is still in its barrel. The bottling and delivery could be two or three years after the purchase. This has been used in the past to invest in top end wines but it is based on an assumption that the wine will be a good vintage. If it fails to make the grade your investment may not see any significant returns. Should you choose to invest this way it is advisable to do so with registered merchants.

7.      Tax benefits

Fine wine is considered to be a depreciating asset as it has a finite life, which is predicted to be less than fifty years. This means that it is exempt from capital gains tax.  As with all financial investments it is best to speak to a tax advisor to discuss your personal circumstances and maximize any benefits available.

Investing in fine wine can be tricky. Whether you’re a beginner or an expert, it is extremely important that you know what you’re doing. Stick to wines with a proven track record such as Bordeaux Chateaux Lafite and top Burgundies and you are almost sure that your investment will pay off.