Buying a property is always a good investment. However, you need to pick the right one before you make your purchase. Our friends at //loweguardians.com/ discuss the four elements of a good investment property that you need to consider.
The first step towards becoming a successful real estate agent or broker is to have quality property investments in your portfolio. If you’re still starting out in this field, you need help determining which types and what elements you should look for before concluding that a property is a potentially good investment.
Sometimes, it’s not just about all the property’s qualities and elements — it also has to do with the actual type of real property. Should you capitalize on purely land/lots? Ready-to-occupy houses and apartments, or in multi-unit complex properties that are still going to be built? This might also depend on your goals and who your target market is. However, if you want maximum returns from your assets, here are a few things to consider:
1. Location – still.
As a real estate agent or broker, you must consider many growth factors that surround the location of a potential investment property. Properties in highly urbanized areas already cost more, so if you want to invest at a lesser rate, pick locations that are not directly in the center of a business district, but are adjacent and potentially accessible for development and commercialization in the near future.
This applies to different types of property, whether land, single family housing or multi-family apartments. A strategic location is also the first factor that most homeowners and tenants consider, and you’d want to assure them that their property can be easily accessed from their offices, retail shops, banks, restaurants and cafes.
2. Invest in properties that can complement the location’s vacancy rates.
Before settling into a certain location, it is best to ask around other property managers in that area about their vacancy rates first. You only need to ask them how many properties they have in total and how much of that remains vacant.
The ideal number is around 3 to 4%. An area with vacancy rates in excess of this is not a good sign.
3. Newly built properties are more preferable.
Most property buyers and lessees prefer units that are newly built. This is because there won’t be as many issues with leaky pipes, cracked walls, chipped tiles and other physical concerns regarding cleanliness, safety and maintenance. Building a new property would also cost you less compared to constantly fixing and maintaining an old property.
4. Get properties that match the area’s average income and rental rate.
There’s no point of building or investing on a posh studio apartment in a neighborhood that’s in the lower-middle class spectrum of the social ladder.
You must invest in properties that match the needs and lifestyle of the area. If you’re accessible to a business district, you may have the chance to sell condo spaces, but if your property is near a university belt, then it would make more sense to invest in apartment buildings that benefit from competitive rental rates from college students.
Banking on good locations and properties is just the first step towards succeeding as a real estate investor. There are also other factors that can contribute to your success later in your career. This includes how effective your payment collection is (i.e., whether like buyers/lessees pay on time) and how the management and upkeep of the property is being carried throughout the successive years.
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