How to start investing in real estate?

Investing in real estate - where to start?

Robert Kiyosaki's books are very popular today. Many people after reading them are so inspired by real estate investing that they are falling into financial troubles due to too hasty action.

Would not it be better to first learn at least the basics of investing and to save yourself the overrun of your wallet?

Real estate is profitable and that is the fact, more and more people start to personally talk about it. A wise investment is able to "feed" the investor for a long time, and too hasty choice of investment opportunity can turn out to be tragic.

Unfortunately, a lot of people work under the influence of impulses - they find some information about real estate or financial leverage, and they do not know anything about what they do not know, often without knowing what depreciation is.

Asking about the differences between the premises and the building helplessly spread their hands or try to respond intuitively. This article is directed primarily to "freshmen" wishing to start generating income using real estate.

Where to start adventure with real estate?

The adventure with real estate should start with an explanation of what is a place, a building and a building. It is true that these definitions can be found in dictionaries or statutes, but I suspect that few are willing to break through formal descriptions.

What follows from the statutes can be presented as follows: the building is an object having a roof, foundations and rooms or living quarters and / or utilities, the building is a separate part of the building and the building is all the rest (please do not search for inaccuracies in these definitions, For sure, they are, I'm just a pictorial representation of official terms, or as one who prefers to describe "peasant understanding".

Depreciation of real estate

An important, perhaps even the most important, concept of real estate is depreciation. Depreciation is simply a portion of the initial value, in this case, of the property that the taxpayer counts as tax deductible for the tax year.

While an average investor is praying for a stock market boost ("benefiting from the benefits" of appreciation) to make his shares or units of the fund more valuable, a wise investor uses what he offers to depreciate because it brings profits much faster.

The definition of depreciation involves the concept of a depreciation charge, which is the annual amount of revenue earned at depreciation rates. A beginner investor is usually interested in two rates that are:

A) 1.5% for premises and residential buildings
B) 2.5% for non-residential premises and buildings

It should be added that not every property and / or building can be depreciated. We will not write anything in the case of land and perpetual usufruct rights, premises and buildings owned by housing co-operatives, and components that were once used for business, rent or lease but are no longer used in any of these ways (which does not mean, They are no longer used at all).

You can depreciate all premises and buildings that meet the following criteria:

A) owned or co-owned by the taxpayer
B) characterized by long life (over one year)
C) are usable when they are put into use
(D) they must be used for the purposes of carrying on a business, rent or lease.

Real estate in our possession unfortunately is not subject to depreciation before the end of one year.

I hope that at this point I have cleared up your doubts about the basics of investing in real estate, if you had them of course. I think that since you have devoted your precious time to reading this article, you are more or less interested in investing in real estate, so you need to dig deeper into your subject or go to a tax advisor.