mondial travel insurance: The Complexities of Investing in Real Estate

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A financial services course can cover subject matters anywhere from fixed annuities to interest rates to home mortgages. Any type of investment requires detailed knowledge and planning partnered with monitoring. For many people, home ownership is the single largest investment that they will ever make. Whether it is a single family home, a multi-family home, a commercial property or vacant land, real estate investment is one of the most important parts of your financial portfolio. Owning a real estate property is usually held as part of a larger portfolio, and is generally considered an alternative investment class. However, it provides diversification value, yield enhancement, and the ability to influence performance.

The real estate market can be tricky and unpredictable, but if you enter it at the right time, it can prove to be a smart investment. An investment management specialist will help guide you through your real estate choices. Three key indicators as to whether or not a real estate market has started to rebound are: local unemployment rates, rents, and foreclosures. These indicators can easily be overlooked. It used to be that the three biggest determinants of a property's value were location, location and location; in a slow economy, however, it could be jobs, jobs and jobs.

A financial services course will inform investors on the latest updates in the real estate sector. In the case of rental rates, the general rule is if real estate prices are more than 15 times annual rents, the market favors renters?under 15 and the market favors buyers. Finally, healthy communities have fewer foreclosed properties. Key indicators in housing include housing as a share of GDP, home ownership rates, monthly payments, percentage of household income spent on home payment, and sale price for a new single-family home. Housing as a share of GDP came to an average of 17% in 2010 as compared to 21% in 2005. Home ownership rates were 67% in 2010 as compared to 69% in 2004. The average monthly mortgage payment was $900 in 2010 compared to $1,360 in 2007. In 2010, only 18% of household income was spent on home payment, as compared to 32% back in 2005. Lastly, the average sales price of a new single-family home in 2010 was $222,000 as compared to $240,000 in 1980!

An investment management specialist will inform you that one of the main differences between investing in real estate versus in other assets is that real estate is highly tangible. Unlike stocks or bonds, you can actually see and touch your real estate property. Although it may seem like a good deal on paper, you have to be aware that owning real estate involves much more than collecting rent and paying bills. This often creates substantial pride of ownership, but also has its negatives because the property requires hands-on management. You don't need to paint the walls of a bond or mow the lawn of a stock! Real estate can produce an income, like a bond, as well as appreciate, like equity. If you are considering investing in multiple real estate properties, you should consult with an investment management specialist beforehand to decide how they will work in your current portfolio.

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Saturday, January 28, 2012

The Complexities of Investing in Real Estate

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