On an average house, prices go up by 7% a year, but as I said, on an average, in a normal city or state where jobs are not disappearing, prices will go up by 7% a year.

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Now let us say you invested $100,000 to buy a house of $1,000,000. When you bought the house, other houses in the area were selling for $1,100,000 or more, but because the seller had to move out, as the husband’s job got transferred so they decided to sell it fast, you negotiated and you were lucky to buy it for $100,000. After one year, prices of homes had a double digit price increase. Some houses in the neighborhood were listed for $140,000. Assuming that you can sell your house as a sale-by-owner for $125,000, you will be making $25,000 profit on your $10,000 down payment which is 250% profit in one year. This is also called leverage because you can leverage the real estate so profits that you make on your original investment are enormous. There is no other business that can make that kind of money. But the trick is that your original purchase has to be right also. You have to find the best deal in the area. You have to find out which person is desperate to sell the house. Sometimes you can find deals which are 20% to 40% below real value. If, to start with, you bought a real good deal, then your investment can grow by 100% the very first year.

There is no better investment than real estate. Your own home, where you are going to live, is the best investment for a beginner. The first investment you want to do in your life is buying your own house. As I mentioned before, you don’t want to be a tenant. People who are tenants are always poor. People who own houses are rich. Real estate has always gone up. Ask anyone who has owned a house for a long time, they will tell you, home is the best investment they have ever done. People who own houses for a long time, they will tell you they cannot dream even of living in a rented place. If you own a house, in the long run, you live there for free, because prices of homes go up, and in the long run, if at all you will sell it, you will get all your money back. A home is also one investment which you can have without any down payment or only 5% of the value of the home. If your credit is good and you are making enough money, then developers and home owners desperate to sell their homes will put your down payments. The government also has lots of schemes for the first time home buyers, where you can put practically no money down. You can also go to your bank and borrow a down payment as a personal line of credit at a very low interest. You can also borrow the down payment at a higher rate of interest from some lender and buy a home, and once the house is bought and if you have made a good deal, then you can raise money on a home equity line of credit. Once you get your home equity line of credit, you pay back the lender from whom you have borrowed the money at a higher interest rate.

(ROI)Now if you use creative financing options real estate has potential for even larger return on your investments as you have invested hardly any money from your pocket and you are making money with others people money. Return on investment is called (ROI)

Buying real estate in partnership or groups.

If you find a real good piece of property at a very low price, there are always people looking to invest money. You find a good deal and group might give you may be 20% to 50% share without you investing any down payment. Group who has invested money will get return on their money plus what ever their share of income and profit real estate brings at the time of sale.

By Ashok of http://becomerichinfiveyears.blogspot.com



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