The purchase and resale or rental of property for occupation reasons only is termed as residential real estate. Places of residence differ in regard to the designs as well as the kind of structures that the owner wanted used in the building and construction. Most of the people find residential real estate as a lucrative business since if you have an apartment with tenants; you are entitled to a constant income from the monthly payments in form of rents.
Investing in real estate is purchasing and selling of physical buildings which may be rental or business use whereby in this case we major in the residential real estate. Maximization of resources and profit is what most investors and entrepreneurs always look at before they venture in that particular business. Real estate is one of the investment that utilizes a bank’s money in the most profitable and lucrative way since you only need to make down payments then your tenants’ monthly rent will help you in the repayment.
Land and buildings over the time have been known to actively appreciate in value as long as you situate them in the right place whereby a monetary value may be attached. Due to the depreciation on mortgage interests and deductions, your cash flow will be deemed to be tax free if you have leveraged on your capital. The main factor that will dictate the overage of tax is the class that you put yourself in; either as an active investor or a real estate expert. Residential real estate will go a long way in ensuring that your retirement and old age is secured especially if the return per month is quite sustaining.
Having talked about the good side of residential investment makes it possible for the same investment to have the bad or rather the risks involved in choosing it as an investment. The benefits that people reap in the business makes other want to join hence very competitive in every aspect. The interest rates especially by banks may fluctuate while you are still paying your debt or equity which in result may cause you inability to pay for the acquired property.
The property, if it’s mainly residential, could stay for a long time without being utilized or untenanted hence loss of a significant amount of income. Bad tenants are people that you as a residential realtor dreads and is always a large challenge especially if you depend on the payments to finalize and complete your payments. If your residence units are situated in unproductive areas, the rental payments may be static and not increase or gradually fall over time to lure more tenants.
Deciding whether it is the right path depends on how you weigh the benefits that you get from residential real estate against the risks as assessed.