How to Grow Rich with Property Investment?

How to Grow Rich with Property Investment?

Principles and Strategies to Create Wealth & Passive Income the Smart Way

By

Praveen Kumar & Prashant Kumar

©Copyright 2018 By Praveen Kumar

Terms of Use

This Electronic book is Copyright © 2018 By Praveen Kumar. All rights are reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means; electronic, mechanical, photocopying, recording, or otherwise, without written permission from the copyright holder(s).

Disclaimer

The advice contained in this material might not be suitable for everyone. The author obtained the information from sources believed to be reliable and from his own personal experience, but he neither implies nor intends any guarantee of accuracy.

The author, publisher and distributors never give legal, accounting, medical or any other type of professional advice. The reader must always seek those services from competent professionals that can review their own particular circumstances.

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Table of Contents

WHY INVEST IN REAL ESTATE?

REAL ESTATE INVESTING - BASIC PRINCIPLES

REAL ESTATE INVESTMENT STRATEGIES

RESIDENTIAL VS COMMERCIAL REAL ESTATE INVESTING

REAL ESTATE FINANCE

STRATEGY TO BUY OUTSTANDING INVESTMENT PROPERTIES

HOW TO FIND GOOD INVESTMENT PROPERTIES?

FORMULAS TO ASSESS VALUE OF AN INVESTMENT PROPERTY

REAL ESTATE INVESTMENT ADVISERS

CONCLUSION

OTHER BOOKS BY THE AUTHOR

ABOUT THE AUTHORS

APPENDIX

Ninety percent of all millionaires become so through owning real estate.

~Andrew Carnegie

Why Invest in Real Estate?

To understand the power of real estate investing, you have to first understand the 'Why’ of real estate. It is the 'Why' that will provide you the motivation and the energy to invest in real estate. Once you are convinced that real estate is one of the best vehicles of wealth creation, understanding the 'How’ becomes easy.

Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.

~Russell Sage

Most people who lack an understanding of real estate will tell you that investing in shares gives you better returns than those that come from real estate. There are others who say that renting is cheaper than buying your own house. You have to understand how real estate compares with other investment avenues such as savings account, shares/stocks, commodities and businesses.

Rate of Return

Return on investment (ROI) is definitely one of the most important criteria you should consider whilst making an investment decision. However, simplistic calculations based on yields can be very misleading.

Yield, by definition, is the ratio of annual income generated by the investment divided by the dollar amount of investment.

Rate of return should be considered after taking into account the risk involved: is the investment is inflation adjusted? Is there any capital growth on the principal invested? Does the investment provide tax benefits and is it possible to leverage your money to get higher returns?

Real estate investments – as compared to bank deposits – are definitely superior in terms of yield and capital appreciation. Savings in banks do not provide hedge against inflation and your money depreciates in value over a period of time.

Shares and stocks are perceived to have higher returns than property and provide hedge against inflation, but they are pale in comparison to real estate when you take into account the leveraging power of real estate investing and tax advantages of property. It is possible to buy properties by using Other People’s Money (OPM) with returns that are 20–100 percent or more per annum.

Financial Leverage

No one has ever become rich without applying the power of leverage. Financial leverage in the investment world comes from the use of OPM or Other People’s Money. In real estate investing, we buy property on a 10% down payment and yet we control 100% of real estate.

For example, let us say we buy a property of $100,000 on $10,000 down payment. Let us assume that the rent from the property covers the mortgage payments and the outgoings. If the price of property moves up by 10% over the year, the market value will increase to $110,000. This means that we would have made a profit of $10,000 on our investment of $10,000, which is a 100% return on investment and was made possible only because of the power of leverage.

Our return on investment would have been infinite had we bought the property with no down payment.