Over the course of the past decade, the housing market has changed considerably. The steps to take in choosing a formidable investment property have evolved. The point of investing is to make money, so it must be possible for the property to have long-term capital growth.
In a perfect world, a property should have the potential to double in value every 7-10 years. The long-term historical rate for appreciation in housing is 8% even when the market is currently suffering. Thus investing is always a good idea if done correctly. Many factors must be taken into consideration when making a choice. Where the property is located, its condition, and whom you select to rent all influence the value of your investment.
Inspect the Area
Location is a major indicator of value. It is no secret that despite how inexpensive a property can be, if it is in the middle of nowhere, it is not a sensible investment decision. The closer the property is to the central business district of the area, the more value it will have. Urban or suburban areas with good schools, a stable job market and access to public transportation are prime selections. These are also the hardest investments to find as they are in the highest demand.
A Sturdy Build
Examine the architecture of the property. It is very important when choosing your investment. If the home needs renovations, consider how in depth of a project that would be. It may be possible that they are minute and easy fixes. In that case, a tenant can live there while money is saved for any mass overhaul.
The key is to optimize on your investment, not overcapitalize. Minimal repairs include jobs like new doors, painting and landscaping. It is a safe bet to avoid major repairs for optimal ROI. This includes projects like a new heating system, roof or plumbing. Any major system in the house in general, should be intact and working for a prime investment,
Here to Stay
A reliable return on rent is the bread and butter of investment. It is what ultimately sets the stage for a wise choice and the opportunity for future investments. A tenant that is already living on the property is a great benefit that is often overlooked. You will have no interruption in terms of extra income.
It is a smart move to require a slight increase in rent each year as well. The market of this day and age requires that rent should cover all outgoings, which include variables like mortgage, taxes, management and maintenance. Having an owner-occupy appeal is also important. Does the property encourage the tenants to stay and/or buy long term? Who is living on the property is just as important as the structure established there.
Overall, it is not hard to make an intelligence investment decision if all aspects are taken into consideration. The economy is rough in this era and a means of breaking the cycle is by making educated decisions on where to put your money. Studying all the factors like location, architecture and the market in general will encourage a healthy return.
