Are you thinking about investing in a property? Do you know what to look for in an investment property? Buying real estate is a smart strategy for securing your financial future and accumulating wealth.
But before hunting around for an investment property, there are some key factors you should consider to ensure you’re making a smart investment.
Property investment contributes to capital growth for property investors, and many people are turning to real estate investment to attain financial freedom.
Whether you are a seasoned property investor or trying to become a property developer, this blog shall highlight and discuss what to look for in an investment property including strategic property advice to help you make the best decision for your money.
Suggested Reading: For insights into avoiding common pitfalls in the property investment journey, refer to our comprehensive guide on the 10 Most Common Property Investment Mistakes.
6 determinants in property investment
Don’t fail like most property investors who have failed in real estate investing because they looked at the wrong factors. Before you go into property investment, it is crucial to look at capital growth, rental income, and maintenance costs.
Here are six factors that will give you a gold-standard desirable lifestyle in property investment.
Location
Location is one key factor for investing in a property. It can have a significant impact on the value of a property, as well as its rental potential. It’s a property investment cliche for a purpose, and both investors and tenants can benefit from its knowledge.
Consider what a potential tenant might want in a property by putting yourself in their position. The property will be more attractive to tenants if it is close to and easy to access schools, public transport, and other attractions that are a part of many people’s lifestyles, including restaurants and stores.
Rental yield and demand
Investors sometimes rent out their properties to make money and defray expenses. Evaluating the financial sustainability of a property requires looking into locations with high rental yield and demand.
The predicted rental income is compared to what it costs to own and maintain the property to determine a property’s potential profitability. These consist of council rates, insurance, upkeep, strata fees, and mortgage payments.
Potential for appreciation
While it’s impossible to predict the future of the property market with certainty, it’s still a good idea to consider the potential for appreciation when evaluating a potential investment. Look for properties in regions that are anticipated to experience substantial growth in the near future.
Condition of the property
A rental property in good condition is more likely to attract tenants and command higher rents. Be sure to carefully assess the condition of any potential investment property, including the roof, foundation, and mechanical systems.
Management and maintenance
Owning a rental property requires effort and time to look after and maintain. Consider if you possess the necessary skills and resources to handle these tasks, or if there is a need to hire someone to manage your property. This will impact your ongoing maintenance costs and potential return on investment in the property markets.
Capital growth
Basically, capital growth means the rise in a property’s value over time. Research the growth-line indicators for any property you want to invest in. What is the average cost within the area? Has it risen in recent years?
Mortgage broker – do you need one?
It’s not strictly necessary to use a mortgage broker when purchasing an investment property, but working with a qualified broker like Soho Home Loans can have several benefits. A mortgage broker is a financial expert who assists borrowers in their search for the most favourable mortgage terms and interest rates.
Because of their connections, they may be able to secure better rates and terms from multiple lenders on your behalf.
There are some benefits to using mortgage brokers and they include;
Expertise
Mortgage brokers are experts in the field and can help in navigating the elaborate world of investment properties. They can explain the different types of loans available, help you compare rates and terms, and guide you through the application process.
Time-saving
Working with mortgage brokers can save you time and energy, as they can handle much of the legwork for you. They can also shop around for the best rates and terms, and help you gather all the necessary documentation for your loan application.
Multiple options
Mortgage brokers can present you with a range of financing options from various lenders, which can increase your chances of getting approved for a loan. Further, with their assistance, you can evaluate multiple possibilities and zero in on the best fit.
Conclusion: what to look for in an investment property
With the help of our real estate investing guide, we hope you can make a more informed decision on your loan. But feel free to check out our finance section for more guides and tips.
In summary, there are various factors to look at when searching for an investment property.
It’s important to choose a location that is likely to see growth in property values, as well as a property that is in good condition and has the potential for renovations or improvements that can increase its value.
It’s also crucial to carefully consider the costs associated with owning an investment property, including mortgage payments, property taxes, and maintenance expenses.
By keeping these things in mind and doing thorough research, you can make an informed decision and find an investment property that is well-suited to your needs and financial goals.
