Have you heard about real estate investment?
Have you given it a thought to invest in it but get stuck about how to go about it? Yes, real estate investment technical-know-how can sometimes be challenging. Let’s look into it.
Real estate investment can be described as a way of investing in property and it involves purchasing, rental, ownership, sales or management of properties for profit. It is one of the earliest forms of investment that is lucrative and profitable, and its worth keeps increasing.
If you are considering investing in the stock market, real estate can be one of the profitable investments with liquidity, unique cash flow, and huge return on investment (ROI).
However, first –time investors are often faced with the issues of what we should be looking for in a real estate investment. This becomes a matter as some realty investment industries are tricky with giving out the necessary information to benefit the investors in real estate investment. This may be as a result of hidden agenda unknown to the investors. Though there are some real estate investments out there that are truthful and straightforward, yet, you must know some basic things to look for, to serve as a guide to selecting the best real estate investment. Let’s dive into it.
Top 5 Things to Look For in a Real Estate Investment
Scrupulous examining can only determine the value and quality of a real estate investment. Many things should be factored in selecting a good and profitable real estate investment. However, this article has discussed five basic things to look out for in real estate investment. Highlight below are the top 5 priorities to look for in a real estate investment:
Location: This is one of the most important features to look for when it comes to real estate investment. The location of the property will determine the category of renters that will be attracted to the property in consideration. Critically look at the quality of the location if it can turn-in cool cash quickly. Some of the criteria of a well-located property are proximity to the public places such as market, hospital, higher institutions, major business outlets, shopping malls, parks, and much more.
Any rental properties located closer to these listed public areas attracts higher demands from the prospective renters. And this will result in huge cash flow for you as an investor of the properties.
Also, industrial areas are good locations with job opportunities, and this tends to increase the number of people migrating to these areas to live closer to their offices. All these important places with the availability of social amenities enhance the value of the property.
- The quality and type of the property: After location consideration, the next thing to factor is the property itself. What type of property should you invest in? The type and quality of your real estate investment determine the success of the investment. This directly involves your investment strategy as an investor. Investing in building or property that requires frequent maintenance may turn to influence the success of your real estate investment.
Quality property requires not only less frequent repairs or maintenance but can also be rented or leased faster at higher rental value. If you go for quality properties, you tend to benefit from the investment in the long run as the buildings are LEED certified, which adds value to the property.
If you are investing in the real estate investment for the first time, you can consider a condo. Real estate investment on a condominium has been studied to be profitable in term of quality as it requires less repairs and maintenance. You can also look for a good and appealing property which has features that can lure renters into renting or leasing it for different purposes.
- Cost effectiveness: Location and property quality are not the only factors to consider. The price of the property is also important in the real estate investment. The higher the cost-effectiveness of your intending real estate investment property, the more return on investment.
However, the profitability of a property not only depends on the price but also property taxes. It involves the total cost incurred in procuring and keeping the property. So, when considering buying a real estate investment property, invest based on the value of the property. Value the property very well; if possible, invite an estate agent to help you assess the property if it worth its price tag; so, not to be at a loss.
- Expected cash flow: Every real estate investor expects huge monthly or annual cash flow from his or her investment. Your cash flow is your monthly staple which can be described as amounts (such as taxes, mortgage payment, maintenance, and repairs) invest in the property to maintain or keep the property. Find out if you can still come up with a monthly or annual positive cash flow of all the money incurred in keeping and maintaining the property.
If the investment returns are studied not to be positive, don’t try investing in it. It is important to research the property you intend to invest in, to know the history, vacancies and occupancy rate in the area. However, if you have already bought such property, try to invest more in the property by carrying out some renovations and with time, you will begin to produce huge positive cash flow as expected.
- Investment leverage: After considering location, quality, price, and expected cash flow, another important thing to factor among the top five factors in your real estate investment is the investment leverage. This involves the risk and reward in the investment property. A good realty investment is the one in which the reward is higher than the risk. How do you calculate your leverage?
You must understand that the property would need maintenance to keep it suitable for the renters. However, the maintenance to be carried out on this property must not be too much to be a good consideration for investment. Take a look at the construction of the building if it is standard. Note that a poorly constructed or situated property tends to consume more money in maintenance. Consider how much you are investing as a start-up capital and the frequency of maintenance in the long run. If the incurred cost is higher than the returns, it is not a good choice.
Real estate investment generally needs more startup capital, experience, time, and working strategy than any other investment portfolios. There are many other things need to be considered in investing in a real estate. We have mentioned the top five factors but still left out with some other factors such as inflation, market rivalry, transportation, tenancy, market risk, operating agreement, debt terms, and public infrastructure, amongst others.
Over times, investing in real estate property had been the best decision of investors and this has even improved as real estate investment properties keep appreciating every day. However, you need to link with the experienced and reliable vendors to enjoy a huge return on investment (ROI). This site has made everything simple in real estate, allowing old and new investors to invest in most quality and cost-effective real estate investment properties at good locations to give you value for your capital. Our real estate strategy is one of the best in the real estate investment portfolios. Contact us today!