Real estate is the steadiest of all investments in today’s world. Earlier it used to be gold, and many people still go by it, but the truth is, real estate is the only investment that has the minimum chances of going down the drain in the evaluation process in the long run.
If you are thinking of making an investment but have no experience in real estate investments, this article will help you get your basics right, and then you can consult a suitable investment advisor to know all the details you need to.
Things you need to start with when you are investing property in real estate include some important and a little complicated things such as:
- Legal issues
- Evaluation of said property
- Long term investment benefits
- Extensive due diligence
- Current evaluation parameters
The evaluation of the said property depends on whether it is a new property or second-hand. It depends on various other factors such as:
- Location– Property closer to the heart of the city will cost more, and those far away, with difficult commutation modes will cost the least.
- Neighborhood– Though almost the same thing as location, these two are different factors because the street and the society are not always similar in terms of the class of people financially and socially speaking.
- Rent– Any property you invest in, you must know if it will produce a good rent if you let it out. That way, you can recover a lot of your investment. Typically, a property that can return at least 1 percent of the cost price per month is a good investment.
- Wholesale evaluation– If you have the money and the courage to take a calculated risk, you can buy wholesale property at cheap rates. Property that is of no value today, can bloom up to glory in a decade, and you can sell it off at up to 10 times the cost price.
When you are looking forward to making such a huge investment, you need to have a backup for all the primary resources, which, in this case, include:
- Pre-sanctioned loans– The seller of a hot property won’t wait for your loans to get sanctioned. You need to be the early bird.
- Raw money investment– You need to try buying the major part of the property in cash, to save yourself the burden on excessive loans. Also, you need to have raw money in hand to make the necessary fix-ups in the new property.
- Cost recovery plans– You need to have a recovery plan handy, such as people willing to stay on rent on the property you are buying.
- Alternate property options– You need to be flexible and well-informed about all your options. You need to have a Plan B for all your Plan B’s and you need to make the right decisions quickly.
It is also advisable to hire a tax consultant for your real estate investment so that you know about all the costs you are heading into. Do not miss out on any opportunity to legally cut your cost price and increase your returns through rent.