Real Estate can be a very sound investment, and the long-term benefits are very attractive. However, you need to take steps to ensure that you get a sound investment rather than a money pit that is only going to be a nightmare. Here are some signs to watch for when you are searching for a good investment property.
Know the Area
Location is everything, and properties near good transportation links and attractions will fetch a higher rental amount than more isolated properties. Before making the investment, do some research on real estate sites to see how much rentals in an area are typically going for. Potential renters are future buyers are going to want shopping that is reasonably close, and they will be more attracted to properties that are near jobs and local attractions.
Overall Cost and Rate of Return
Your rate of return is determined by more than your purchase price. You also have to look at the repairs, renovations and upgrades the property needs. Every dollar you put into the property delays the time when you will start seeing a profit, but you may have to invest money to prepare the structure. If you are going to do the work yourself, then you should also take your labor into account. The best deal can wind up costing too much if it needs extensive repairs, has foundation damage or needs to be fully updated and remodeled. It’s also important to factor in the money that will be spent on future repairs and updates.
Local Vacancies
In addition to examining the building, you should examine the surrounding area for excessive vacancies and fresh listings. If other buildings in the area are not moving or renting, then the area could be on the decline and any property investment in that part of town is likely to prove troublesome. Look at the history of property values in that area. Buy in areas where values have risen or held steady, and avoid any areas where property values are gradually declining.
Quality of Construction
Don’t make the mistake of looking just at the paint and colors on a house. What you really care about is the quality of the construction. The foundation should be solid, and the construction materials used should be a higher quality. Look for a simple design and good floor plan that flows naturally from one area into the next. When a house is solidly designed and constructed, it will not require as many repairs over the coming years. The surrounding yard also matters. While you may not be too worried about the landscaping right now, you do want to make sure that the yard does not get too wet after the rain and that there are no other serious issues with the gardens.
Before making any investment, it’s wise to carefully examine the property. You are going to look at more than just the basic architecture and floorplan. Consider the quality of construction, potential problems with the yard and the repairs that need to be made. Location is everything, so pay careful attention to the surrounding areas, and take the time to research historical real estate information to see if property values are on the rise or are slowly falling.
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