Hello World! Welcome Friends! Being in real estate investment isn’t an easy path to walk. Investors need to strategize and plan a lot of things ahead of actually investing. The first step is obviously to select the property and here are four basic factors that you need to consider to make sure you find the ideal property.
1. Location
Location was and continues to be the most important factor. In fact, location is the king in the real estate sector. A profitable location for a residential property is one that offers proximity to amenities, beautiful landscape, scenic views and a good neighborhood. While the plus points for a commercial property are its closeness to transport hubs, markets, warehouses, freeways and tax-exempt areas.
With regards to the location, you need to find out how the area is expected to develop for better over the period of your investment. At the same time, the ownership and the intended usage of the immediate areas of the place you plan to invest needs to be evaluated. One way of collecting authentic information is by contacting the town hall or other public agencies that are in charge of urban planning and zoning.
2. Purpose and Horizon of the Investment
Your investment’s purpose and horizon is important because given the high-value investment and low liquidity in real estate, clarity is required to get the expected results. This is especially relevant if the investment is mortgaged. You have to find out as to which broad category suits your purpose the best and then plan accordingly. For instance, you can buy and self-use, which will let you save on rent, enjoy value appreciation and derive the benefits of self-utilization.
Alternatively, you can also buy and lease. Now, this offers a regular source of income and long-term value appreciation. However, this arrangement will necessitate you to handle possible disputes and legal issues too. You can also buy and sell both short-term and long-term if you are looking forward to enjoying small to medium profit or a large intrinsic value appreciation respectively.
3. Size of the Property
The size of the property is an important consideration and your choice will typically depend upon your budget and needs. Loans and mortgages are available out there for you to purchase property and can be really useful when you are looking forward to investing in a fairly large commercial space. You can also speak to a banker or an experienced real service provider to get a clear idea of what’s feasible and viable based on your specific needs.
4. Structure of the Lease
If you are considering renting the property, you have to consider the number of years to lease the property for. The common lease periods fall between 3 years to 5 years. During this period, owner of the property cannot ask the tenant to leave nor can they rent the property to someone else. These risks will be there, and a longer lock-in period can actually benefit the buyer.
While these are the key factors of consideration, there are other important elements such as the cash flow and profit generation, leverage, new property or existing property, etc. Getting guided by experts such as Houston REIA and others in the field of real estate helps you move in the right direction.
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