Investors therefore have to be very considerate while investing their money in any property to ensure not only minimize their risks but also get the best Return on Investment from what the market has to offer. Theodore Roosevelt, former U.S. president is quoted as saying “Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.” For this to happen, one has to consider several factor as they make their investment decision.
This include; location or proximity to key amenities, current value of the property, property use or purpose, expected return on investment and opportunities for indirect investment Proximity to key amenities of common use is very important to any serious realty investor. These can be inform of neighborhood status, scenic views, continuous developments in the locality and proximity to any public property. Properties near banks, supermarkets and road networks usually have high value in comparison to those that are quite far.
This is because there is improved accessibility and utilization of available resources such as schools and other social places. Current property value is key in forecasting the future return on investment hence very important to note before committing to buy. The value can be established by an authorized valuer or can be determined by the current price and the pricing profile of the provider. Other factors that determine the value can be the sales comparison approach, cost approach as well as the income approach for the rental properties. Properties with high insurance premiums are great for investment.
It is always good to note the investment purpose or use of the property before purchase. Investors may buy a property for self-use, speculation or even buy and lease. The property purpose and usage influence cash flows hence determining the expected return on investments. For instance, speculators may have a benefit of property appreciation over a given period of time hence high profitability.
Where there is depreciation, the investor may however benefit from tax exemptions.
Finally, there are other indirect benefits that come with real estate investment. These benefits include Real Estate Company Stocks, Mutual Funds and mortgage bonds and Real Estate Investment Trust (REITs). Real estate investment offer high value risk-return profile hence investors should position themselves well enough to reap benefits while mitigating risks.