If the investor wants to buy property includes land on which the building is standing and its value is highly variable. There’s a price equal to the price of building land, or land prices are higher than the price of the building, or land prices lower than the value of the building. Type of property that can be made into a business, including houses, shops (shop), warehouses, malls, hotels, office buildings, resorts, and apartments.
When investors invest in the property required to diversify the risk is small and make a profit. Diversification of the property using the concept of location and type, such as an office, residential, and warehousing.
When you want to invest in the resort, usually built in mountainous areas and beaches for leisure travelers on weekends or breaks. Similarly, warehousing, when in the middle of town so it should not favorable near the airport or seaport. Some experienced investors in property to warehouses on the outskirts near the highway so that the goods are stored can be sent to the destination via the motorway.
Hotel as an investment established in urban areas or vacation spots, rare in the suburbs that no consumer is likely to come. Hotel has two functions, namely as a place to rest and stay as well as a place to discuss various things.
Residence may be established in the middle of a city apartment or condo or in the suburbs. Location should be close to transportation expense for applicants / investors do not have to grow.
Manage the property as a business or investment means that there are periods when the property “held” and sold. As a business, investors leased the property to another party. Generally tenants always wanted properties in strategic locations.
Location of the property also determines the amount of rent. The strategic location will result in more expensive rental, lease and even gained almost equal to the interest of the funds invested in the property which means that investors earn huge profits. When investors choose a strategic location and if the purchase price is very cheap, then the rate of return received is very high.
If the rental value obtained is not equal to the interest rate applicable, then the value of the lease must be at least half the prevailing interest rate. However, because the location of the property is not strategic, the rental value of the acquired 3% -5% of the value of investment property every year.
Furthermore, if investors want to invest and collect benefits later in life, then the property must be strategic and have calculated the price increase during the hold. At the time held, the property must be leased and the amount of rent should fit the previous description.
If the property is not rented out and wait until it sells, then the low return rate because the buildings will be damaged or smaller price. The property will be preserved if there is a place that property prices will be higher than the empty forever. In this case, the investor must have a calculation of the increase in property prices over the handle.
Formula that can be used, namely the minimum interest rate on deposits plus a tolerable risk to the investor on an investment property. If the interest rate on average over the period held by 8%, then the investor must have an average rate of return higher than the minimum premium of 8% and 4% -6%.
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