If you’re looking to get major returns on an investing career, real estate may be the place to focus on. Investing in real estate can offer your wallet great rewards if you understand the market and the nature of the business. Here are seven things you should look for when making a decision about an investment opportunity in real estate.
1. Low Risk of Natural Disasters:
Before making the plunge into a real estate investment, be sure you know as much as possible about the geographical area you’re considering. Research any type of natural disasters that may have occurred in the region, such as floods, forest fires, or earthquakes. An attractive property that has all of your must-haves may not make financial sense if it sits in a dangerous flood zone.
2. Top Neighborhood:
Next, get as much information as possible about the neighborhood your potential investment property is part of. A great property that features lots of amenities and a beautiful floor plan won’t make money if it sits in a crime-ridden, dangerous neighborhood. You can get a sense of the neighborhood by visiting the property on several occasions and driving around the area. You can also understand more about the area by checking out crime statistics for your neighborhood.
3. Stable Pricing History:
It’s also important to look back into property records and see the pricing history of your real estate investment prospect. It’s best to see a general rise in property value over a long period of time if the home is older. In some cases, you may see some extreme price fluctuation from the housing crisis a decade ago, but the property should have bounced back in value at some point. Learn from real estate investment veterans, such as Aubrey Ferrao, and look for long-term trends in a property’s potential instead of a short-term windfall.
4. Tax Incentives:
Be sure to also understand how your potential investment will be taxed before making the purchase. Property taxes can bite into your bottom line and impact your profits if they suddenly go up or get restructured. Aim for purchasing opportunities that give you some sort of tax incentive if possible. Some regions offer investors incentives in the form of tax breaks if they put money back into the community.
5. Other Development:
If you find a property that has a lot of potentials to be an amazing home for someone, you can also get even more value if you’re near other well-known developments. Do your homework to look for popular developments that feature incredible amenities and seek out investment properties near these areas. Businessman Aubrey Ferrao has created a high-end community in Naples, Florida, that has helped attract other real estate investors to the area.
6. Homes Moving Fast on the Market:
Smart real estate investors also should have a good understanding of what other properties are doing in the neighborhood. Find out the average number of days properties sit on the market in the area to see if the region is a good investment opportunity. Additionally, if you want to consider renting your investment property, look at the percentage of vacation rentals to make sure your rental property will be able to find tenants quickly.
7. Minor Cosmetic Issues:
Finally, the last thing to look at when deciding whether or not a property is a good buy for an investment, look at the home itself. It’s a good strategy to find a diamond in the rough property in a fantastic neighborhood that is being offered at a cheap purchase price. Look for properties that only need minor cosmetic updates, such as paint, windows, landscaping, or other small things instead of homes that need major expensive overhauls.
Being a successful real estate investor means you’ll need to be very careful when making that first purchase. Find a property that features these factors to get closer to a profit.
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