Investing in real estate is not an easy formula to crack. You have to minutely check all the details before buying or leasing the property. This becomes crucial for those who are looking to buy the property for their business purposes like manufacturing or distribution unit. One has to look for a place that is spacious and can easily accommodate all the equipment to work flawlessly. Let’s face it the last thing you want is a place where there is a risk of manual handling of raw material or goods.
Moving forward, property prices are volatile. But, most of the times it is in an upward trajectory. Thus, making real estate investment, one of the safest bets. Before you dive deep into the pool of real estate market, always stick to your end goals.Investing in a good and upcoming property will make your investment grow exponentially over the period, while you are using it for your business activities.
Now, not everyone is blessed with the wisdom of property investment know-how. It is better to know a few things beforehand to save yourself from any bad investment. You can either learn it by thoroughly researching the topic or you can seek the advice of an expert. Asking someone who knows a few things about real estate investing can benefit you a lot.
The following are some tips which will help you out in your quest of real estate investment:
Real Estate Investment Is Not Everyone’s Cup of Tea
Either you are searching for a property for investment purpose or your business activity, whatever may be your case. But it is a fact that real estate investment is a hard pill to swallow. Before investing in any property, you have to keep many things in mind. Each property has its own set of pros and cons depending on their location, appreciation potential, etc. You simply just can’t buy a property because you have gathered all the required information about the property. You need to understand the true purpose of use of the property and then have to connect the dots. Every property has different tax deduction rates based upon its location. In the long run, it can make a big difference. You have to take the final decision, so take some time and then come to a conclusion.
Invest Only When You Don’t Have Any Debts
It seems lucrative to buy and own a property. But, in reality, you have to deal with a whole lot of expenses. One of the most common of them all is the repair work and some specific expansion or changes you need. If you are going to use the property for commercial purposes then you will require some huge investment for customisation. With all these additional investment costs, a pre-existing debt will increase your financial burden. Because the same real estate property will also cause recurring expenses like taxes, maintenance cost, etc. It is better to be debt-free before buying a new property.
Hire a Property Manager
Whether you are buying the property for business purposes or as an investment. You always have to make sure that your property is in good shape throughout the process. Managing a property is not an easy job, one has to cover a whole lot of different areas to keep it running. Without proper management, the property can lose its value and can result in losses. Thus, hire a competent property manager once you purchase a real estate property. They will look after every problem and will simplify your work. You can save a lot of time if you have a rich property portfolio. As this property manager can handle them all for you.
Be Careful with Interest Rates on Loan
People these days, don’t believe in buying the property upfront. Instead, they take a loan and repay the instalment for the same. When you are buying a real estate property on loan, you need to be cautious about the interest rate it carries. You don’t want to make a mistake of signing up for a loan with a high rate of interest. As it will increase your expenses and will hinder your profit motives. Just imagine how you can divert the money saved from low-interest loan and use it for loan repayment and maintenance.
In the real estate market, it is important to calculate the profit and return on the investment beforehand. Different investment fetches a different rate of returns, like bonds, can roughly give you 4-5% interest. In the case of stocks, if you invest smartly, you can get 7-8% ROI. So, while buying real estate property always keep ROI in the back of your mind. You just need to stick to a simple rule. If after deducting different costs such as maintenance costs and loan instalments, if you are getting 5-6% ROI, then it is worth buying the property. You can’t get emotional while buying property, you need to be calculative.
Compromising on Neighbourhood
In the efforts of looking for low property tax deduction rates, do not compromise on the quality of the neighbourhood. Tenants tend to prefer a good neighbourhood that has low crime rate, a growing job market and all the amenities within an accessible range. If places such as parks, malls, restaurants, and movie theatres are in close proximity, the better is the chances of getting a good deal. People would gladly pay a little more rent for a house in a good neighbourhood. So, the better the neighbourhood of your property, the more is your scope of earning. So, stay away from the lucrative tax deductions or low property rate you will get on the odd neighbourhood. And invest your money on upcoming and established ones.
An experienced real estate expert will tell you the exact points mentioned in the above blog. These points may not be the guiding steps for any financial investment. But it can surely help you to form a strong baseline when you are trying to invest in a potential property.