Location is always a major consideration in real estate,
but there are many other factors that help determine whether an investment is right for you.
So here is a look at some of the most important things to consider if you are planning to invest in the real estate market.
Property Location
Location is owned and still the most important factor for profitability in real estate investment,
as proximity to amenities, green spaces, and scenic views,
the neighborhood prominently positioned in residential property valuations.
While proximity to markets, warehouses, transportation hubs, highways,
and tax-free areas plays an important role in commercial real estate valuation.
The key when looking at a property’s location is a medium to long-term view of
how the area will develop during the investment period.
For example, today’s open land in the back of an apartment building could one day
become a noisy manufacturing facility, reducing its value.
You should carefully review the ownership and intended use of the immediate areas in
which you plan to invest.
One way to gather information about the possibilities next to the property you are considering is to contact
the city hall or other public agencies responsible for zoning and urban planning.
This will give you access to the long-term planning of the area and decide on the
appropriateness or inappropriateness of your own property plan.
Real estate valuation
Property valuation is important to finance during purchase, listing price,
investment analysis, insurance, and taxes, all of which depend on property valuation.
Commonly used real estate valuation methods include:
- Sales comparison approach Comparable recent sales of properties with similar characteristics – the most popular and relevant for both new and old properties
- Cost approach: land and building cost minus depreciation – suitable for new construction
- Income approach: on the basis of expected cash inflows – suitable for rent.
Investment purpose and investment prospects
Due to low liquidity and high-value investment in real estate, intentional lack of clarity can lead to unexpected results,
including financial hardship, especially if the investment is mortgaged.
So you should decide which of the following broad categories fit your purpose, and then plan accordingly:
- Purchase and self-use: Here you will save on rent and benefit from self-use, while also obtaining an estimate of the value.
- Buying and renting: This provides regular income and long-term value appreciation, however, the mood of being a landlord, essential for dealing with potential disputes and legal issues, tenant management, repair work, etc.
- Selling and Buying (Short Term): This is generally for quick, small and medium profit, typical property is under construction and sold at a profit on completion.
- Buying and Selling (Long Term): This generally focuses on estimating significant intrinsic value over a long period.
This in turn provides alternatives to complement long-term goals, such as retirement.
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