If you are looking to diversify your investment holdings, real estate can be an excellent choice. The benefits of investing in real estate can be significant, but it’s important to take the time to make sure you’re buying the right one. This gives your investment the best chance of success in the future
Getting into investment property can be tricky, but these 6 tips can help you navigate the complexities and reap the rewards of your real estate.
1. Choose your location carefully
When you’re looking for a property to buy, keep in mind that the value you can get from your investment will be based, at least in part, on how desirable the property is to potential tenants. This means that location is key.
People tend to look for housing located close to work to reduce the hassle of travel, which means that properties close to the city tend to be in higher demand.
If you’re willing to take a little risk, it might also be worth investing in areas that are likely to see substantial growth in the coming months or years, such as proposed infrastructure changes .
2. Look for real estate that are close to public transportation.
Once you’ve determined the general area you want to target for your investment, it’s time to start narrowing down your options. Access to public transport is important for many, especially those considering renting a space in more congested areas where parking is difficult and expensive. Ideally, investment properties are a 10 or 12 minute walk from public transport .
3. Stay close to other amenities too.
Public transportation isn’t the only thing to keep in mind when you’re narrowing down your list of potential properties. Easy access to shops, restaurants, fitness centers, and other amenities can also make properties more attractive to potential tenants .
This should be weighed carefully against general location and access to public transport to get the big picture of how different properties compare.
They are the factors, along with the age and condition of the building, as well as the features of the property, that will determine how much demand there is in the rental market, and higher demand means higher rents.
4. Keep scarcity, or supply and demand, in mind when evaluating a property.
Location is a key factor in determining the demand that will exist for a property. Availability of rentals in nearby areas determines inventory. Imagine two residences that are a short walk to public transport and close to interesting shops and restaurants. Both will be in demand – they are in a growing place.
Near them, there were only a few other apartments or houses. Near the others, there is a large complex with more than a dozen rentals available. The first residence would probably be a better investment.
While demand is similar for both, supply is lower for the former, meaning more competition among tenants for space. That competition translates into higher rents and more favorable rental terms for owners.
5. Take the time to research the area.
Before committing to an investment property, make sure you understand the environment. This is especially important if you are considering a property that is in an area where you don’t spend a lot of time. Investigate the area’s real estate market, including average rents, rental rates and information on home sales.
Find out if there are major development plans in the works, including shopping complexes, large factories or office buildings, or new apartments. New construction can affect the value of your investment , and it’s better to do your research first than to find an unpleasant surprise before you have time to replace your investment.
The board’s planning office will be able to provide details on any upcoming projects, and you may want to spend a little time investigating other sources as well.
6. Avoid unplanned properties.
Off-the-plan properties are properties that share features with each other. They are often built at the same time by the same developer, and often have very similar, if not identical, designs.
Because they are so similar, they are often cheaper to make, which means they are cheaper to buy. It may seem like it’s upside down, but it’s rare. Unplanned traits, by their nature, usually have no rarity.
They often huddle together, and they tend to hit the market at the same time that construction is complete or the lease ends. Because of this, it’s hard to take advantage of the location and amenities the property has to offer – there’s too much competition among property owners to attract tenants.