We all have different goals when it comes to real estate investments. Some simply want a place to call home. Some want an urban lifestyle in the booming part of town, whereas some just want real estate purely as an investment decision. Sure, it’s great if the real estate you’re buying seems like an awesome deal, but there are factors you need to carefully consider.
FACTORS TO CONSIDER BEFORE PURCHASING REAL ESTATE FOR INVESTMENT PURPOSES
- Location, Location, Location: The quality of the location will influence the type of renters attracted to your rental property.
- Safety: No one wants to live in an unsafe neighbourhood. You can inquire about crime rates in the area the property is located.
- Proximity to Social Amenities: What attractions are nearby that will both be a draw and requirement for renters? Things that must be considered are shopping malls, schools, hospitals, gyms and access to public transportation.
- If you can’t afford to pay cash for the home, at the very least, you should be able to afford the mortgage payments, even without rental income.
- Understand your expenses: The cost of taxes, utilities, upkeep, and repairs. You need to price your rental property so that all of these fees and other expenses are fully covered.
- In-depth research of the property: examine the land deed thoroughly, consider comparables in the neighborhood, is the area up-and-coming? What other external factors could affect the property value?
- The Real Estate Market: track housing prices in your area. Have real estate prices gone up or down?
- Demand Vs. Supply: Predicting and investing in a location that has a good ratio of demand and supply is what makes long-term real estate investors successful.
- Vacancy Rates / Inventory: You need to review the vacancy rates that have existed based on inventory levels and how this may impact your monthly rental rates.
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