Real Estate investment seems to be the latest investment trend in town that everyone wants to key into. Perhaps because of the gross benefits in the investment option, many investors are on their heels to make sure they have a bite of the cake. Generally, investing in Real Estate business is such a great idea because it appreciates in value over time. However, there are many untold disadvantages of Real Estate investment. But investors are only keen on the benefits they’ll rake, not minding the possible loss that can be met. Investors are to be mindful of the fact that investments are risky businesses, so an unpredictable and unexpected can happen. If you are considering venturing into Real Estate investment, there are some helpful factors you need to consider. These factors will help guide you, allow you to plan well and execute the investment flawlessly. The factors are listed below:
Top 8 Factors to consider before investing in Real Estate
- Set your investment purpose
Many people venture into Real Estate investment with a goal of making profits. That’s the basic goal of every investor. But before you finalize and perfect your investment, you must be able to draw a definite purpose line. You need to ask yourself whether you’re investing for a long-term or a short-time purpose. This will help you to know the financial goal you’re working towards as an investor, and how you can speed up your preparations towards making the investment successful. You must define your purpose to avoid some unexpected results. Part of the investment purpose expects that you know if your investment is for commercial purpose or personal use.
- Know about the market
The market is a very important to consider. If you’re not conversant with what happens in the Real Estate market, you might be investing rightly in a wrong business. Walk up to reliable Estate managers or property agents that can expose you to the market, expectations and possible risks associated with Real Estate investment. This is essential because Real Estate market fluctuates.
- Calculate expenses
You don’t want to invest in a business and end with losses, right? That is why it is important you calculate all expenses that will go with the investment. From the start to the finish, you must be accountable for all expenses, so you must keep an evaluation of every financial transaction. Although, you may not have a definite list that covers the exact amount of money you’ll be needing in the investment, but a rough estimate is better than none.
- Income stability
There will be hiccups if you don’t plan the investment well from the onset. Real Estate investment is one that requires a lot of capital to start and you must be ready to foot every financial need that arises. If you’re not financially balanced, you may break down along the way, and this may crumble all plans you might have erected initially. So, having a stable source of income is really a factor to settle first.
- Choose investment partners carefully
In business, those you work with influence what the output of investment. You must be careful in selecting partners that you’ll work with to achieve your goal. Find partners that are trustworthy, reliable and traceable, should in case they run away with your money. Get enough details about whoever you’re investing with. You may think your best friends are the best set of people to involve, but it doesn’t matter. Your best friends can outsmart you if it’s about money.
- Consider loan option for massive investment
You need some huge amount of capital for Real Estate investment and your salary is a meager? Fine, just apply for bank loans. You’re definitely going to be needing a strong financial back-up to accomplish your investment goal. However, while you’re applying for bank loans, opt in for an option that will have just little effect on you. Choose a plan wisely, so you won’t be living in abject financial distress. Choose a loan option that will foot the financial requirement of your investment and will, at the same time, not affect other necessary functions you’ll be needing money to execute.
- Location of property
For commercial purpose, location of property is very essential to consider. You need to make sure the property is located at a peaceful and scenic environment. When you look around, check the proximity of the location to markets and basic home amenities. This factor must also be considered well because it speaks about the value of the property in the future. If, for example, the investment is located where there are no basic infrastructural amenities such as good roads and electricity supply, it does not mean the location is a bad choice. In such cases, it means you must be on a long-term goal so that by the time you’d be using the investment for commercial or residential purpose, the location would have experienced necessary developmental projects.
- Evaluate the property
As an investor, especially one delving into Real Estate business as a first-timer, you may not have deep knowledge about property valuation. Most times, you need a Real estate agent to evaluate the property you want to invest in. This will go a long way to keep you from spending on an investment without any feasible profit organization losing all money invested in the business. With a quantity surveyor, you can get accurate evaluation of the property. The evaluation process includes but not limited to research about other properties around the location of your investment so as to know the worth range of the business you’re delving into and have a clear picture of what you stand to gain in the investment.
While it is good to consider investing in Real Estate, you must also be familiar with the risks involved. Every business is a 50-50 stuff; you can lose or gain. However, following these listed factors above will maximize your potential of making profits in Real Estate investment.