When you’re buying a forever home, it’s essential to ensure a property gives you that warm and fuzzy feeling. When it’s about business and making money, you have to let your head rule your heart. Investing in bricks and mortar can pay off, especially if you have a portfolio. But there are plenty of pitfalls lurking out there. Here are some essential considerations for investing in property.
This is perhaps the most important factor to consider when you’re looking into buying an investment property. The value of residential and commercial properties varies hugely according to the location. Even a single kilometer can make all the difference when it comes to making profitable acquisitions. Before you even consider making offers, work out your search area. Carry out through research and pinpoint exactly where you want to buy. You may be targeting a perennial winner. Or perhaps, you’re going for an up and coming area. Once you’ve got your area marked out, get in touch with real estate agents. If you have good relationships, you’ll hear about potential options before anyone else.
You may know that you want to buy a house. But what kind of house are you looking for? Who are you aiming to target with this purchase? If you want to appeal to families, there’s no point in looking at swanky one-bedroom loft apartments. If you’re looking to impress young professionals, it’s unrealistic to buy a 5-bedroom detached home. Research your typical buyer. What is their budget? What features do they look for? What kind of property would be most appealing?
Successful investment is all about buying and selling for the best price. If you pay too much or accept less than market value, you’ll lose out. When you’re looking at prices, make sure you factor in additional fees. You need to have a total in mind before you can decide whether or not the price represents a good deal. If you’re interested in saving money on fees, you may wish to consider exchange deals. This way, you sell one property and invest money in another one without losing money on taxes and fees. If this sparks your interest, look into opportunities like 1031 investment property.
If you’re an investor with creative talents or you like getting your hands dirty, look for potential. Buying a doer-upper can often generate significant profit, especially if you do the work yourself. Always look out for ways to make money when you’re viewing properties. Could you add an extension or fit a new kitchen? Is the work purely cosmetic? Could you create more space by converting the basement? Make sure you do the sums before you buy a renovation project. You don’t want to end up making a marginal profit after months of hard work.
If you’re buying property for investment purposes, you need to identify projects that will appreciate and earn you money. Put emotional feelings to the back of your mind, and go with your head. Think about location, and always bear your target market in mind. Set a budget, and stick to it. The higher the price you pay, the lower the chance of making a profit. Look for potential, and don’t be afraid to negotiate.