Investing in properties, anyone ?
A typical person normally have different investment vehicles, be it the more commonly understood share markets / mutual funds related , precious metals like gold, silver to favourite of many – property. There have been many advocates and reasons as to why property investment is favoured. Many successful business people like Ray Kroc (founder of McDonald), late Tan Sri Lim Goh Tong (founder of Resorts World, Genting), Donald Trump(successful property developer in US), Queen Elizabeth(owners of many castles in UK), Robert T.Kiyosaki (the authour of Rich Dad, Poor Dad and many other books) are some high profile property investor themselves.
Unlike many other investment vehicles, property investments have some distinctively unique advantages, just to name a few :
1. A good collateral
Typically, banks or financial institutions will accept properties at reasonable valuations, good locations, accessible to amenities as collateral for loans. This is especially true in Asia countries as most banks favoured properties versus shares as collateral.
2. Good hedge against inflation
Land is irreplacable resources. It cannot be multiplied or reproduced. Also, due to increase of building material cost, labour and land cost, property prices tend to go up over a period of time.
3. Powerful leverage tool
Property is the kind of investment people like you and me do not need to have all the cash or capital to own it, it can be borrowed through the banks, or financial institution & repay the loan over a long period of time. Some smart people even able to own or invest in a property without using a single sen of their own, this is term as ZERO DOWN investment method.
Typically, a property investor are looking at 2 type of returns from the property investment.
This is the monetary income derived periodically from renting out the said property to businesses (for commercial property) or family/individual (for residential property, normally are like apartments, condominiums).