Where’s my best real estate investment spot?
If you’re looking for hot beds when it comes to property investment, you need to keep your eyes out and check what the stats say in different areas as well as current and future development plans, so you can get the best returns for your investment.
To do it right, here are some helpful tips:
1. Find Upwardly Mobile Middle-Class Neighbourhoods
You need to look for localities where middle-class people are likely to relocate to. Make sure that you look for job offerings, and the rate of population growth. You will need to check the target market for your property, and their preferences.
2. Do Your Research Thoroughly
Before you make an investment, it’s important that you check out what’s already existing, or what’s coming to that locale, as this will inform your investment. If a large international company is about to open an office nearby, chances are that you will have no issues selling or renting the home. However, if an industrial unit is approved to be built nearby, you should not invest in family homes, but can rent out renovated, modern flats to working professionals.
3. Have a Look at Property Price Leanings
One of the best ways of determining the future price of the property you buy is to look at property price trends in the area. Check the quantity of sales in the past 12 months, as well as the sale prices. If you can see an upward trend in the property type you are about to invest to, you can expect a good return. However, if the prices are falling, or there is a decreasing demand, you might want to choose another area to invest in real estate in. To decide whether or not to invest in real estate in a region, however, you might need to talk to property experts who know your target neighborhood in depth.
4. Look for Areas with High Population Growth Projection
One of the best ways of determining future demand for properties in the region is to check the demographics of the area, and the population growth projection. If the population in the region is growing fast, chances are that the location is desirable, and the demand for homes is going to go up. If the population is ageing, however, you might find that the demand for new homes will decline over time, and you will not be able to sell the homes on fast. If there is a high number of 20-30 year olds in the region you are likely to invest into, you can expect these people to look for their own property over time. Keep an eye on property trends that influence the decisions of people in that neighbourhood. Pick your target market carefully to adjust your property to their needs.
5. Pick Popular Layouts
One of the most important things you need to check is the preference of your target market when it comes to layouts. Every generation has a preferred layout. Young professionals look for simplicity and easy maintenance, while young families want a large back yard for the kids to play in. Middle-class families with older children might want an en-suite bedroom, more rooms, and a large kitchen to satisfy the need of all family members. Young executives working long hours might be looking for serviced apartments where they get all the services and amenities included in their bills. Check property websites and look for the most popular types of real estate, to offer something that your target market is looking for.
6. Bring Something Bigger to the Table
After you have chosen the location for your real estate investment, you will need to examine the competition. Chances are that there will be hundreds of similar homes for sale in the neighbourhood, and you will want to make a profit as soon as possible. To make the most of your investment and reduce the time you have to wait until you can sell on your investment property, you must offer something extra that appeals to potential buyers.
7. Check Jobs, Economic Statistics and Outlook
One of the best ways of predicting how desirable an investment real estate will be in the future is to look at the employment rate and median income in the area and the surrounding neighbourhoods. If you invest in an area with families earning two average salaries, and having two kids, you are likely to have ready buyers for your property. The higher the income and employment rate in the area is, the more likely you are to find qualified buyers for your investment real estate.
8. Compare Supply and Demand
When visiting property websites, check what the traffic is like in terms of how many people are looking for a home, and how many houses have been sold in the past few months. Some of the sites will give you detailed statistics on how long each property type takes to sell on the average, and how many percent of the asking price owners can achieve. This way, you can understand the demand for your type of real estate, and the maximum price you can sell it for in a certain period of time. Look out for homes in the neighbourhood that have been on the site for over 6 months. If there are multiple, you should look again to make sure that you are not going to be stuck with your real estate for a long time.
9. Analyse the Rent/Price Ratio
Having a Plan B in real estate investment is important. If for any reason you are unable to sell the house in the set out time that you deem fit, you might still get a high yield on renting it out. To calculate the Rent/Price Ratio, you should divide the investment price with the yearly rent. Renting out the house might cover your financial commitments, even give you some regular monthly income.
Summarily to hit it right when it comes to property investment, you need to choose your location carefully, to avoid. Focus on supply and demand, demographic trends, and population growth predictions. Get to know your target market, and learn what they are looking for. Offer more than other real estates in the region, to make your offer stand out. Create contemporary layouts that suit the needs of your buyers, and target the right people when advertising. Look for homes with a high rent/price ratio, so you prevent losing money in case you are unable to sell on your real estate in a reasonable time. Remember to put yourself in your potential buyers’ shoes and understand their needs.