Your Easy Guide to Choosing the Perfect Property to Invest in
When it comes to shopping for an investment property, there is a lot of work to be done. This task may be daunting especially for the first-time investor. We tell you how to go about buying the right property for investment.
For most people, investing in a house is the biggest financial decision that they make in their entire lifetimes. It isn’t like buying consumer durables or even a low-cost index fund. You cannot just simply visit a store to buy or choose online from the options available for you. To find the right property for investment, you require a great amount of dedication, patience, as well as luck.
Our easy guide will help you in finding the perfect property for investment:
- Research the Location of the Property:
Before investing in a house, make sure that the location of the house is right. This is probably the most important factor that you need to consider. After all, even if you are dissatisfied with the amenities of the house, you can always renovate and change according to your preferences. However, you can never renovate the location of the house. Choose an area that is well developed (or has high chances of being developed in the coming years), has a quiet neighbourhood with no crimes in the locality.
Also study the past market rate trends of the area you are looking to buy an investment property in. This will help you understand the demand for real estate in the area. If the area has not seen any rise in real estate prices in the last few years then, it may be possible that there is no demand for property in the area.
- Consider New vs. Existing:
One another common question that people are confused about is that whether they should buy a property for investment that is a new construction or an existing one. Both options have their pros and cons and ultimately, it is your personal choice. When you opt for a new house, you can get the newest amenities and a clear title, in addition to the option to customize it as per your preferences. However, there is always a fear of delay in terms of the possession of the house handed over by the builder. In contrast, with an existing property for investment, you have an option to move in or rent it out immediately. Make sure you verify the title and condition of the house before sealing the deal.
- Avoid ‘Bargain’ Homes:
If you are finding a house at an exceptionally discounted price against the prevailing market rates, be cautious when buying such property for investment. There can be several reasons for the property being sold for cheap: There may be an inherent problem with the property, it may be under dispute, or the owner must be in urgent need of money. Make sure you find out the true reason before you even consider buying the property.
- Go for a Reliable Developer:
Before you decide to buy a property for investment, make sure you thoroughly research the developer’s profile. Start by checking the projects already delivered by the builder and on-going projects. Look up whether there were any delays in delivering the past projects. Also find out whether the builder has been embroiled in any project-related legal issues in the past. Finding out as much information as you can is great when you want to be sure about the reliability of the builder.
- Review Your Cash Flows and Profits:
Before buying a house for investment purpose, you should review the cash flows. If you are looking to rent out the property, check the existing rental rates in the area. Analyse how soon you will be able to convert the cash flow into profits. If you are considering selling the house for a tidy profit in the future, keep checking the potential selling prices so that you can enjoy some good gains.
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