THERE are two sides to every coin, and so it is with investments, whether in the bull or bear markets. Where weakness in property stocks may come as a misfortune to some, it's an opportunity to accumulate assets and increase wealth for others.
In investing, it is common for investors to own multiple properties, one which serves as a primary residence, while others are used to generate revenue. Real estate, when bought for a song and sold for a stately profit, can generate some serious income. Close a couple of such deals and you're on your way to attaining financial freedom.
Then again, although there are many like Vanessa Tshai (refer to http://www.horlic.com/how-she-makes-rm200k-in-property-investment-within... who have made their heap buying and selling property, there are those who have had their hands burnt, investing blindly.
This has led to growing interest from the public and a rise in the number of property investment seminars, where wanna-be investors can learn the tricks of the property trade.
Leverage for more
Property investment gurus like Milan Doshi and Vincent Wong can attest to the tried and tested theories of property investment. They've even devised foolproof methods on how to make your property purchases work for you.
Says Milan, "Investors need to learn how to borrow 'intelligently' as much as possible. One of the ways is to leverage and use the bank's money, even though you can afford not to. By doing this, you only need to come up with a minimum of let's say 10 % for the down payment, and take on a smaller percentage of the risks involved."
What more with some property developers launching developments where zero down payment is required.
Win-Win options
Vincent Wong on the other hand wrote Step by Step Guide to Lease Options and co-founded Wealth Dragons. He believes that one does not require finance to invest in property.
The UK-born and bred investments coach and international speaker has helped many sellers move on in their financial difficulties whilst assisting investors in making property purchases, without having to take up a mortgage plan. He does this using a method called 'Lease Options', which he coined.
"A piece of property can be an asset or liability to the seller, depending on the seller's circumstances. Lease Options is a contractual agreement made between the seller and investor, where the latter resumes all responsibilities of the property, including the mortgage payment and the property's maintenance.
In this agreement, the seller gets to move on with his/her life while the investor will fix an 'option price' at which the property can be purchased in the future, typically between five and seven years.
In other words, the investor promises to pay the seller's mortgage in return for the capital potential increase of the property in the future. Naturally, the investor will let the property out to tenants and benefit from rental profits.
If the investor decides not to exercise an option at the end of the agreement and purchase the property, (which is unusual due to the benefit from the capital increase of the property), the property will just be handed back to the original seller owner.
It's a win-win agreement," Vincent says, but adds that lease options are not meant for every deal and should be used by investors who have been trained appropriately.
The benefits of Lease Options: the seller gets time to get back on his feet where his finances are concerned and has the option of selling his property; the investor gets to make a profit from rental, and if a good arrangement is made, would have structured a purchase option price. In some cases, a profit share can be in-built into the agreement. Lease Options can benefit buyer and seller in many ways.
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