Tips for Profitable Real Estate Investment

Posted On November 14, 2016 | by Qdeveloper | in Investment property
Real Estate investment property

Real investment has always been considered as a profitable field, provided we make our investments in the right place. People work hard to earn money and thus it is important to note that the investments that are being made must have to be profitable in the longer run. Just imagine that you plan on investing your money in something that might reap benefits for the present but might miss out when you consider the long-term benefits. Having worked hard to earn money and to say it go waste, is definitely not something that one looks forward to.

If you think about investing your money in something, real estate seems to be the right way to go about things. It is basically each person’s wish to invest in something that they find to be useful. But time and again, a real estate investment seems to have been the top choice amongst people. You might consider purchasing a vehicle from the money that you have earned, but if you plan on selling it later, you would have to let it go at a price that is less than what you got it for. This is not the case with investing in real estates. If the market is right, you would be able to get the best deal when you plan on selling the property to someone. 

Why real estate investments?

As mentioned earlier, real estate investments have been the most sought after investment method for most of the people. Real estate industry has been able to establish a name for itself in the world in the past few decades and the demand for their services still does not get anywhere less. If you have a talk with any of the successful entrepreneurs and ask them how they were able to build a name for themselves, everyone would point to a simple fact about reaping benefits by investing in real estate properties. Considered to a long term investment, real estate has helped several people to gain income, even if their current jobs do not pay them much.  Here are some top 10 tips for buying your first real estate investment property

As to why you need to an investment in real estate properties, here are few reasons that would help you to decide.

1. The source of income

Source of income

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For people who plan on putting up their property for rent, the rental money that they get from the tenants every month will prove to be a good source of income.

2. Reap profits  

Reap Profits

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This can be done only if you can land up with a property at a low cost, by using good negotiation skills. When the time is right, you can charge your buyer a rate that is more than the market value and get profits from the dealings.

3. Increases Equity 

Increase Equity

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When you fix a mortgage rate for your property, you would, in turn, be increasing the equity value of the property. The rent that you receive from your tenant would help in maintaining the equity value of the property along with increasing the net worth of the property.

4. Higher rental rates 

Higher rental rates

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This condition holds true if you plan on renting the space to a company for business purposes. By law, businesses who have taken up spaces for rent have to pay an amount that is slightly higher than the ones that are paid by families.

5. Increase in returns along with leverage

increase return along with leverage

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 In this case, consider that you put a certain amount as down payment for your property. Nonetheless, you would still be charging the tenant 100% rent amount for the whole place. Even if you deduct the money spent on mortgages and taxes, you would still be able to get a profit from the difference that is paid in the rent amount. Here are some 11 things to be followed to get better return from selling the property

Getting a profitable deal on the real estate investment

Before deciding upon the property, make sure to get the help of a real estate agent to make sure that you end up with a right deal. Even in this case, make sure to hire an agent who is authentic in work and does not end up selling you a property that has no worth in the market. One important thing to keep in mind is that you need to approach these investments with an open mind as well as you should be making a very deliberate and calculated decision. Here are few pointers that you can look out for when you plan on making an investment in real estate properties.

1. Property taxes to be paid

Property taxes to be paid

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You need to understand that the property tax rates do not remain the same everywhere. If you plan on letting the place for rent, you need first to know how much you would be spending on taxes. Consult your area’s assessment office, as they would have the tax rates that apply to various regions in the area. Fixing the rent after knowing the tax rate for the place would help you to decide better.

2. Neighborhood Location

The neighborhood that you have bought your property in influences your property’s worth directly. By chance, if you are purchasing a property close to some university or school, you would be getting requests from various students studying in the universities who wish to stay at your place for rent. Along with this, the neighborhood in which your property is located would also help you to know the frequency of vacancies that your property might face later.

3. Schools and universities

 You must never presume that a person would move into your house just because there is a school or a university nearby. On the contrary, students or families would think about moving into your property for rent only if the educational institution like IIM Kozhikode, NIT, Medical College etc that is located nearby is of good standards. If you hastily purchase the place and later plan to sell it, you might face troubles with selling the property at a higher cost than the one you paid for during purchase.

4. Available amenities

Check if the property that you have in mind has nearby parks, malls, gyms and other recreational centers along with utility stores and supermarkets. Apart from this, check if the house is close by to some form of a transportation hub. These are few things to be kept in mind and few things that would attract prospective tenants if you plan on buying the place in the city.

5. Crime rates in the area

No one, be it the students or the families, would want to live in a neighborhood that is well known for its crime rates. If you wish to learn about the crime statistics of the region, go to the local police station or the public library. They would be able to help you to find out is that particular place is the hot spot for crime. Make sure to do a background check on everything, right from vandalism, petty thefts to the serious crimes that might have taken place in that area.

6. Opportunities for employment

Opportunities for employment

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It is a well known fact that settlements and properties seem to have developed at a faster rate in places having better employment opportunities. Make sure to understand the type of business that is being dealt in that region as it might negatively or positively affect the price of your property. Entry of new corporations that has promising jobs would increase the flow of prospective renters into the area.

7. Rental amount

Before you fix the rent for the place, do a check about the average rent that is being levied out in that particular area. On the other hand, make sure to fix the rate for rent after factoring the amount you would be spending on the mortgage, tax, and other fees. You must fix a rent in such a way that, you are still able to get a benefit from the amount that you have fixed after you have paid the mortgage, fees and property taxes. You can check out 4 Ways to value a real estate rental property here.

8. Opportunities for future developments

Opportunities of future developements

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Before purchasing the place, ask around the place to learn more about the future developments that the area might face. For instance, if the place is going to get new recreational centers, malls or supermarkets, you would be able to see that the number of people looking forward to getting a space for rent also increases. Along with this, keep an eye on the developments that might negatively affect your property’s price in the future.

9. The occurrence of natural disasters

In this case, you need to take up insurance for your property, and you would be deducting it from the return that you get from your property. If you know that the place is going to face some form of a natural calamity like earthquake or floods, then it is definitely not advisable to get that property. 

There are several good cities and neighborhoods, and the real estate industry is definitely booming with opportunities. Making an investment in real estate not only deals with buying a property but preparing you financially to buy the house and face any situation that might follow. Make the right investment to make sure that you get the maximum benefit out of your purchase.

Q Developers is one of the reputed builders offering luxury villa in Kozhikode. Live in your dream home and enjoy the luxurious life style with us. Contact us now to get more exciting deals and offers.

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