The real estate industry is a lucrative one, even in the current economic uncertainty. In fact, various experts have predicted that property prices are expected to continue rising. But the industry also represents a higher learning curve, especially for new or first-time investors, which is why thorough research is important before making this bold step. You wouldn’t want to make costly mistakes that will turn what should be an incredible investment into a nightmare. So, are you thinking about investing in real estate? Here are some important things you first need to consider.
1. The type of property
The real estate industry has several types of properties you can invest in, both residential and commercial. Understanding the types will help you make a better investment decision and give you a good idea of how much you can expect to spend. For example, there are rental apartments in strata schemes, stand-alone properties, villas, raw lands, etc. Also, each type of property will come with its own set of guidelines, management issues, expenses, legal requirements, and other considerations. For instance, if you’re interested in buying an apartment complex or townhouse, you should understand the ins and outs of strata living and the management concerns it comes with. You can visit websites like https://www.alssm.com.au/ to understand how strata management services can help you manage this type of property.
2. Location
Location is a massive factor in the success, or otherwise, of any real estate investment. For example, if you’re investing in a rental property in a commercial hub, you can expect to benefit massively from your investment. The same applies to purchasing a residential property in a location with very high demand. In most cases, residential locations with high demand are areas that offer all the essentials for a residential living – water supply, road network, schools, hospitals, parks, supermarkets, and other amenities. The location can also determine if a property will attract a high resale value.
3. Valuation of the property
Once you have identified the ideal location and property type you’re interested in, it’s important to consider the valuation. The base valuation will determine how much you can expect to spend on taxes. It also determines the insurance premium, depreciation value, etc. When determining the base value of a property, it’s important to understand your purpose in investing in a particular type of property. It’s also important to understand what factors and trends drive real estate value and how you can use them to your advantage. Factors such as prices, demand, and future developments, can all determine how much a property will cost.
4. Expected return on investment
If you’re purchasing property solely for investment purposes, you need to have a good idea of how much you can expect to earn from it and how quickly your earnings will start flowing in. Consider how quickly you can expect to rent the property, who your target customers are, and how much they’ll be willing to pay. Next, determine how much profit you can expect after deducting all your expenses after buying the property.
