Factors to Consider Before Investing in Real Estate

For many investors, real estate is a safe haven that is bound to give them good returns sooner or later. Thus, they are always looking for new investment opportunities that they can avail of whether it’s investing in Real Estate such as some flats in Byculla or any commercial plaza in BKC where you can run your big or small business, then there are certain factors that you need to consider.

There are many important factors that you must pay heed to before making any investment in real estate. Today we’re going to discuss some of the most important ones, read on to know more-

Location of the Property

You must have heard that location is the most important factor when buying a property especially if you’re buying one from an investment point of view. It plays a vital role in determining its future profitability. Similarly, having a corner location, easy access, scenic views and ample amenities will further enhance its value.

As far as residential properties are concerned, distance from nearby markets, schools and healthcare facilities also plays an important role. Whereas, for commercial properties, direct approach and accessibility are the key factors.

Get Your Property Evaluated

After finding a property that you think is good for buying, get it evaluated. Getting the property evaluated before buying it is crucial as it will help you in getting your property financed.

Not only will it assist you in getting it leased but it will also help you with insurance and taxation. Through the valuation of your property, you’ll be able to get a rough idea how much it costs and how much it will earn for you.

There are many ways using which you can get your property evaluated and they are:

• Sales comparison approach
• Cost Approach
• Income Approach

Expected Cash Flow & Returns

When you’re searching for a property to buy for investment, you need to give special attention to the cost effectiveness of the property. You have to consider how much money you will be spending on it and how much do you expect to get back in return.

Cash flow is basically the money that is left after expenditures. Therefore, it’s always important to give special attention to the expected income that you think you’ll get from the property along with renovation costs.

Consider Leverage Costs

Many people take loans to fill the financial gap they have when they’re buying a property or Investing in Real Estate. Loans may seem easy and convenient but they cost you more than you might think. The interest rates they show you will feel like a small amount. On the contrary, the overall leverage you have to pay will be huge and spread over many years. Therefore, before you consider getting your property leased keep into account all the leverage costs that you need to pay over the years. However, if you still have to get your property leased then go for a mortgage option that best suits your needs.

Firstly, decide on the type of mortgage that you want to get based on your conditions. Secondly, pay special attention to all the terms and conditions of the contract and calculate the complete amount that you’ll be paying as a whole. Last but not the least, look for better options that you can find in the market and then choose the one with the least interest rate.

Constructed Property Vs Land

Another big decision that real estate investors need to make is what type of property they should buy. You can either go for a constructed property or invest in a piece of land that you will get constructed later.

For instance, if you’re investing in a passive income source that will provide you funds on a regular basis, then constructed properties are the ones for you. Because you just have to buy the property, get it a little-bit renovated and you can immediately rent it out. On the other hand, when you make an investment in land, you can either construct it as per your requirement or just sell it as it is whenever you’re getting a higher price.

Do Some Research on the Developer

Before making any investment in the real estate sector, be it residential or commercial property, make sure to do some research on the developer. It is important to take their reputation into account and know about the projects they have helmed before. It will give you an idea about the condition, quality and other vital aspects of their work. This step is particularly more important if you are investing in off plan properties. It will help you to know if the developer handed over its previous projects on time or there were prolonged delays.

Similarly, if you’re searching for good investment opportunities in anywhere in India then consider buying a property in any of the new residential projects as they’re bound to give you handsome returns.