Things you Must Keep in Mind When Planning to Invest in Property
Interest Rates (Photo credit: 401(K) 2013)
Investing in property can be a fruitful endeavor provided you are cautious and do not dive head first into an offer without first carefully contemplating the same. One of the most important aspects that you need to take into consideration is the rate of interest that rules the property market for that particular period of time. Needless to say, a lower interest rate is an encouraging factor to start looking at properties for the purpose of investment. While interest rates play a massive role and a deciding factor as to whether or not one should invest in property at that particular period of time, there are several other factors that you need to take into consideration before you sign the dotted line and pave your way to future that is uncertain.
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Avoid falling in the interest rate trap by over borrowing:
When interest rates fall, you may be deeply tempted to jump with both feet into the property market and borrow a lot more than you may have initially planned to. As tempting as that sounds; avoid doing this. You need to realize the fact that the property market is not a stable one and while the interest rates are low at that particular point of time, it can spoke up without any warning, leaving you in a lurch. This can backfire and land you in an immense amount of trouble. Therefore, have a close look at your budget and only then decide on the borrowing amount.
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Look at other options as well:
Owning property as an investment is a good choice, but having all of your investments in property form can be a bad news. The reason behind this is an absolute no brainer. In the event of the property market heading towards doomsday in terms of interest rates, you are sure to have all of your investments drowning in heavy losses. Instead, if you have your investments scattered across several mediums like mutual funds, share market and the likes, in addition to the property market, you can be assured that while you may suffer a loss in the property department, the scenario may not be the same in the other markets.
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Let taxes not be the only reason behind your investments:
Often, when you are contemplating investing in properties, the deductions in taxes may seem extremely attractive at the time and you may want to take advantage of this fact. This is where you may go wrong. While it is true that you will be saving a reasonably good amount of money when it comes to the taxes, you also need to realize that these savings are likely to get balanced off thanks to the innumerable other expenses that will follow like legal costs, stamp duties and not to mention, renovations. Renovations can be an expensive affair and therefore, you need to think ahead before you make any decision.
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Take a good look at your insurance policies:
Before you take a step towards investment in properties, you should make sure that you have assessed your insurance and have all the facts right. Essentially, insurances can be of great help not only when there is a situation involving death but also in case of disabilities which may be total or permanent and this can ensure that your debt gets covered in the unfortunate event of you being unable to pay it off.
Investments may promise excellent returns that can give you a secure future; however, it is very important to weigh all your options before you sign the dotted line.
Author’s bio:
Casey Hilton is a financial advisor for a well known finance firm and has been working in this industry for over 12 years. She has a professional background in finances but is also the owner of an online creative boutique store. To know about top law companies click here.
Category: Real Estate
