How to make sure that you are investing in the right property
There are many ways to invest in a property, but which way is the best? Would it be advisable for you to purchase and flip? Should you search for a big cash flow or solid capital growth? Would it be a good idea for you to search for a big bang investment with a high return? There are a lot of choices out there, for example, purchase and hold, rebuild, development, renovation, subdivision, commercial real estate and many more. But, very few of these prove as good investment choices for most people.
With a list of properties, you shortlisted to purchase, you must be afraid of making a wrong decision. This is a situation that every investor face where they feel stressed and puzzled if they are on right track when making the final decision. There are a few questions that fly up in everyone’s mind – How would I pick the best location? What if the property has issues that I can’t fix? What’s the factor on which I should finalise the property if I love all properties equally?
Well, we understand how terrifying and exciting it can be at the same time while deciding the right property. Here are some tips to help you make the final decision:
- Investigate the property
- Use your calculator
- Learn what a good investment is
- Keep the emotions aside
- Know why the vendor is selling
- Understand the market
Here are our tips to help you invest in the right property:
1. Investigate the property
While selecting a property, capital development of your investment is the thing that you should be aiming at. So select a property that is more likely to increase in value with no physical defects. Go through an inspection of the property to locate any potential issues and make your choice as per your needs.
2. Use your calculator
Your dream home can transform into a nightmare in the blink of an eye if you can’t bear the cost of it. Start your analysis by beginning to compute every one of the costs. Right from the registration fee, maintenance store, to service tax and utility charges-ensure you have every one of these factors mentioned in your financial plan.
3. Learn what a good investment is
Doesn’t matter how lovely or newly constructed a few properties are, sometimes they are simply bound to fail. You should understand that not every property will have a positive result. In spite of the fact that you can stay away from this by getting a better idea of what a good investment actually means. Consider factors like the property’s value, exceeding cash flow, property taxes and important decreases of your loan, while assessing a planned property.
4. Keep the emotions aside
Investors should always purchase the property based on analytical research. Will it give the profit or returns you require? Is it in the best area to draw in quality tenants?
By getting answers to these questions, rather than purchasing a residential property because you liked its curtains or thought it would make a decent holiday retreat, you must think based on financial benefits instead of personal emotions. Furthermore, investing is all about the economics, not the emotions.
5. Know why the vendor is selling
Knowing the individual’s reason behind selling the property can make a huge difference when it comes to negotiating the price. While making the initial inspection, try to search for clues to get an idea of seller’s personal situation. While it may sound a little insensitive, this gives you a chance to bargain and also gives the vendor a chance to move on with their lives.
Along with this, you can also make an inspection to get answers of the question like:
- How does the electricity work at different times?
- Are the neighbours party animals or quiet?
- Is the place noisy at night?
6. Understand the market
Consider different alternatives for the properties accessible around the immediate region and talk to as many locals and real estate agents as you can. Online market research would definitely help to access information on average rents, demographics, property values and suburb reports. It is also a good idea to know the progressions that might occur in the coming days. This would enable you to take your decision better.
In conclusion, keep in mind that the real estate markets fall and rise constantly. In case you’re planning to buy a long-term investment property, you can carry on with these fluctuations easily. Neglecting to do the above will unavoidably prompt enormous investment blunder! By knowing your market, you can recognise which property you should purchase. The demographics of a location will have a major effect with regards to what sort of property you purchase.
In case you are in a family market, you wouldn’t invest into a two-room condo, though if you are focusing on a childless, young tenant, you wouldn’t need a huge family home. So, the main thing is – know your market and invest accordingly.
Author Bio: Alex Smith is an editor and works at Challis Capital Partners. He enjoys creating, uncovering and disseminating new and interesting perspectives on Finance, Investments and Mortgages. Challis Capital Partners provides Commercial Loans and Property Finance services throughout Australia.