Real estate seems like a promising investment avenue right now. So, anyone looking to enter the market should start gearing up as this year will come with a lot of opportunities. While the step by step process of closing a deal is important; here we talk about certain unspoken factors that are typically not included in the actual buying or selling process, and must be considered before making a real estate investment.
These points, which are often thought to be general knowledge by brokers, are unknown to people, especially first-time investors. So before you start your real estate journey, make sure you go through the following points and check off this mental checklist.
Type of Property
- The first factor that you need to consider before investing in real estate is the type of property you want to invest in. You must be clear about what you want to do with your purchased property so you can look for options that suit your vision.
- For instance, if you’re looking to turn the property into an office, it needs to be in a specific area suitable for the operations of that office. However, if you’re looking to turn it into something like a retail location, you need a bigger space with a different layout.
- You need to decide if you are looking for consistent rental income, owning a home, or the potential for value appreciation. These choices will influence the nature of properties you will look to invest in and help you judge the locations better. Depending on your purpose, you can deduce your return on investment over the short and long term and crack a much better deal.
- A lot of important characteristics of your real estate deal will depend upon the location you want your property to be in. You could either be looking for a city-centered location that may require you to stretch your budget or a suburban location with more space at the same or even lesser price.
- While choosing a location, you need to have a long term perspective as well. For instance, if you are looking for a property for rental purposes or in the residential space, proximity to amenities like schools, hospitals, etc. will augment the value of your property and can provide a better return.
- The foremost thing you need to do is establish a budget. You need to determine what you are willing to spend and if you’re not going to self-fund it then make sure this amount is in your loan repaying capacity.
- Coming up with a budget range not only helps you determine what type of property you can afford, but it can also help you narrow down options in terms of space and location, too.
- You also need to factor in hidden costs you might need to pay to agencies, banks, and even costs such as renovating, furnishing, or getting the place ready for renting out. These costs should be added to the overall budget.
Value of the Property
- Getting a second opinion about the estimated market value for the property you want to invest in will help you gauge whether it is worth it or not. There is no point in buying a cheap property that might require hundreds of thousands for restoration.
- You can do this by asking about similar properties in the area you are looking in, looking at advertisements, or asking your real estate agent about the real market value of the property you are looking to invest in.
- Before you invest, you need to be familiar with the laws of the area you are purchasing the property in, as well as the taxes you’ll be paying for it. These are factors that need to be considered well before the deal is finalized so that there are no unwanted repercussions later.
- You can hire a lawyer familiar with the ins and outs, who can help you throughout the process. This will help you avoid paying fines and getting yourself in unwanted and inconvenient situations, especially when it comes to taxes.
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” - Franklin D. Roosevelt
While these points seem simple enough, sometimes working out all the glitches can be overwhelming. Getting the right help during this process can make your life a lot easier. We at Blockrise, provide just that. We will make sure you are ready to enter the real estate world and have all the prerequisites checked off.