Tuesday, May 13, 2014

How to choose an investment property

Choosing the right property is crucial in any real estate investment. The right property should be able to attract good tenants and generate significant returns on your investment. 

As a real estate investor, it’s better to buy a property when the price is not at its peak, even better when the prices are low. This will give you an opportunity of selling the property at a much higher price later on.

Before committing to an investment, consider these top factors….

Good location

The location of a property affects its desirability and potential for appreciation. A desirable property location will attract more tenants, while a good location means your property has better chances of appreciation over the long run. 

Proximity to certain amenities makes for a good location. Typically, people look for homes that are close to schools, workplaces, hospitals, grocery stores and markets. Aside from these necessities, most homeowners also appreciate being close to shopping malls or areas with leisure activities such as restaurant strips. Easy access to public transportation is also a huge plus. 

Looking for a property that has potential for appreciation can be trickier. Be on the lookout for emerging communities, public roads and highways that are being developed. Buying a property just before the development of the community can be a good opportunity for value growth. 

Potential return

Aside from the intrinsic value of the property, you should also examine the potential returns on your investment. Check out the renter’s market in the area and the running rental rates of comparable properties. Compare these to the price of the property, monthly mortgage payments and other hidden costs. This will give you a rough idea of how much you could earn from the property. 

The potential returns on an investment also depend on the type of property and the real estate market in the neighborhood. These two factors should match each other. For example, a homey neighborhood close to schools and local restaurants may appeal more to homeowners with families. Thus, a house such as a townhouse with enough room for a family may be the right property to invest in. 

Market trends

It’s also important to buy a property at the right time. Strong growth in the real estate market will make for increases in property prices. As a real estate investor, it’s better to buy a property when the price is not at its peak, even better when the prices are low. This will give you an opportunity of selling the property at a much higher price later on. Pay attention to real estate market trends to gauge the right time to buy a property in a particular area. 


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