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Why Buying a Home is a Good Idea

Nov 10, 2007
The first step to building wealth through real estate investing is to buy your own home. Instead of making rent payments that pay off someone else's property, it makes more sense to make mortgage payments to pay off your own.

This way you not only are not only investing your payments in a property, you are able to take advantage of capital gains.

As you increase equity in your home, you will be able to use it to help you purchase other properties.

After purchasing your own home, the next most common step in real estate property investing is to buy a rental property. If you buy well and get a good rental return with minimal outgoings you will not only take advantage of capital gains but the rent you receive will go along way to paying your mortgage.

As you gain equity in your property and pay down your mortgage, you will be in a position to purchase yet another property and repeat the process.

You need to be careful to minimize the risk by buying properties at below their market value, preferably when market prices have dropped.

This is because real estate prices increase over time and if you are prepared to hold onto property, you will always make money in the long term.

Unless you are wealthy, you will need to take out a mortgage to buy real estate property. A mortgage loan uses property as security for a loan on the property.

A mortgage allows you to purchase real estate with a down payment and repayment terms so that you do not have to pay the full value of the property immediately.

If you default on the payments, foreclosure requires a judicial proceeding which provides the borrower with some protection.

Real estate has historically offered investors far better returns than most other investment options.

With most banks prepared to finance ninety percent of the value of property values, you only require a deposit of ten percent and the ability to make the monthly payments to repay the loan.

Therefore, if you buy conservatively you place yourself in an ideal position to make excellent profits. In fact, real estate has traditionally returned substantially more than average stock market investments over time.

As well as building long term wealth, property investment can offer tax advantages under certain circumstances.

Get advice from your accountant as to whether your circumstances would allow you to claim tax benefits.

Another advantage of real estate investing over stock market investing is that the prices are flexible. With real estate you can make an offer that is lower (sometimes substantially so) than the asking price.

Stock market prices are set and do not allow you any room to move. As a result, you can sometimes get excellent property buys when the seller needs to sell quickly and is prepared to accept your offer.

All in all, investing in real estate is a wise choice that offers excellent long term returns and sometimes even substantial short term gains.

You can begin small with a ten percent deposit on an affordable property and gradually accumulate investments in your property portfolio.

Real estate investment is generally a safe pathway to personal wealth and retirement funding as long as you behave conservatively and wisely.
About the Author
cbriveras.com, Real state & purchasing propperties in Cabo San Lucas, La Paz, Baja California, Pacific Corridor & San Jose del Cabo Pedregal.com is the real estate agency located in La Paz with experienced agents and consultants.
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