What to look for when investing in property
The real estate market is enormous and with both short-term and long-term funds now looking towards property investment, it can be difficult to find the right property. However, there are a number of simple factors you need to take into consideration when finding the perfect investment property which will maximise your potential profits.
This following checklist may seem simple, may seem fairly straightforward but if you actually go through the list when buying a property, it will focus your mind and hopefully allow you to find a property which will increase in value.
Infrastructure
The best investment properties are situated in areas where infrastructure allows people to commute and move freely to and from the region. This is a vital element of any investment property project because quite literally the more people that can access the property the larger the number of potential buyers and the higher the value. If you know of infrastructure projects which are planned for the future, assuming you are early enough, there is the potential to make a significant profit on real estate investment.
Quote from PropertyForum.com: “What is more important, the house or the area?”
Can you improve the property?
While in some cases it is possible to acquire a property which is completely finished and cannot in theory really be improved and still make a profit, this can sometimes be difficult. Therefore, the more successful real estate investors tend to go for properties which they can improve to the benefit of the overall property valuation. These may not be major improvements but even improvements to the appearance of a property can attract more attention and hopefully a better price.
Can you afford the property?
Every time you check the Internet or your local estate agent there will be properties available which attract your attention. Sometimes a property seems too good to be true, sometimes it seems like a no-brainer and people can be tempted to overstretch their finances. You do not hear of successful property developers overstretching their finances because this places undue pressure on the required results and may also affect the timescale they have to crystallise a return. Those who treat real estate investment as a short-term route to riches are the ones who will struggle and potentially lose everything.
What are the prospects for the area?
The value of any property depends upon an array of factors but one important factor is the prospects for the immediate area. It may well be that the area is already popular amongst those looking to rent property, may be within commuting distance of a large city or it may well be that the prospects for the area are about to change. These are factors which you need to take into consideration and if you can buy property before the prospects for an area improve there is an even greater chance of a successful real estate investment.
Leave some profit for the next person
Fear and greed are two elements which rule and ruin investment markets in equal measures! Therefore, if you are purely in the real estate market for profit and return it is vital that you do not get greedy and have property sale prices set in stone. You need to be flexible with regards to your selling price, hanging on for that extra £1000 could well leave you high and dry if the market turned possibly forcing you to sell lower down. Successful property investors are flexible with their prices, leave some room for negotiation and perhaps more importantly, leave something for the next investor.
These are just a few factors which you need to take into consideration when entering the real estate investment market. There are many more which we will cover in the days and weeks ahead and while they look simple on paper, how many of us really follow these principles?