Real estate is a wonderful vehicle for investments but if you choose the wrong property you could lose a lot of money. Real estate will give you a steady flow of income and is something you can continue to enjoy even in your retirement years. However, real estate is not simple and you need to pay due consideration to certain factors if you want to become a success in it.
We will explore some of these in detail below.
Location
Location determines the price and value of the property. If you’re looking for residential property, consider proximity to social amenities like schools markets, restaurants, among others. Make sure that the property has access to all-weather roads, electricity and water supplies.
Buying land in remote areas may be cheaper but no one would want to live there. This means that you will not make any returns on your money and you may end up regretting such a purchase.
Timing
Timing is very important because buying and selling at the right time can make the difference between making money or not. If you buy property at a time when prices are very high, you may find that you are unable to sell it because of market fluctuations which could make property lose value. However, timing may not be very important if you’re buying to speculate because speculators sell when the market conditions are right. However, if you do not intend to hold the property for a long time, you need to pay careful attention to how much you pay for it because it may not give you good returns.
Rental income
The whole idea behind entering into real estate is to get an income. It is therefore important to understand the rental income you can expect to get from the property. Add up all the income you will get from the property in the year and divide it by the total sale price then multiply by 100 to get the percentage. This is a very basic calculation because it does not take into account expenses that come with owning the property like depreciation, mortgage, taxes amongst others get financial experts, HST Lawyer Toronto to get a better understanding of these expenses. For rental property, you can expect to get between 2 to 6%.
Pay attention to capital growth
This basically means how much the property increases in value over a period of time. You need to know what drives the growth of property in a particular area and whether there’s demand for the property. Also check if there is enough supply because if there is a shortage of housing, then the demand for it will be very high and you can, therefore, be sure that you can get returns on your investment. Inflation also has an impact on the price of housing and can easily drive it upwards. Carefully understand all the factors that can have an impact on the growth of investment so that you know when to make your move, whether it is to sell or buy more.
