Friday, August 1, 2008

Holding costs and property investment

Buying property as an investment is always a good investing option. Buying it cheap and selling it in some time when the prices go up or developing it to get some profits is also a good idea. Property investments can be your best investments. Sometimes it takes a long time to flip a property, this is when holding costs add up.

An investor should know all the costs involved in holding a property, usually holding costs get ignored by the investors. These costs are covered easily by the profits so they don’t really get noticed. Some of the costs of holding a property can be the taxes, maintenance of the property, security, utilities etc.

They can be direct expense related to a property or the indirect expenses which may go unnoticed at the time of purchasing the property. But these add up to a significant amount especially when you have to hold a property for a long time and the market growth is slow. So anyone who is looking for some capital gains by buying and selling a property should calculate these holding costs and other related expenses when estimating the profits from the deal.

Its always good to enquire and get estimates from the person who is selling the property beforehand. This way you can ensure that you don’t incur unnecessary expenses on the property you want to buy. You can save a good amount of money knowing your holding costs, most of these costs would be recurring in nature, so the more time you have the property with you the more you have to pay. In a very slow market these costs may even be more than the profits you expect in a particular period

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