Learning how to recognize real estate opportunities gives you a great chance to increase your worth.
Unlike many other investments, real estate consists of a real, physical good that can be endlessly renovated and improved upon. It can be lived in, rented or host a business. It possesses property, a finite resource.
But done incorrectly it can instead be a money trap, losing you considerable money.
Below we’ll take a look at how to recognize good real estate opportunities. You’ll learn what to look for, and, in turn, what to avoid.
Location, Location, Location
Owning an investment property typically implies that you won’t be living in it. In that case, you need to consider the needs of potential tenants.
Buying a property in the catchment area of a good school has great appeal to families with school-age kids.
Also consider both employment rates and economic diversity. You’ll need to be in a neighborhood that can afford to pay the rent you’re looking to charge. Knowing that there is a stable workforce helps ensure that you’ll find the ideal tenants.
You also need to be sure that there is demand in the area you’re looking to buy. If houses are on the market for an extended period of time, or rentals have high vacancy rates, you can’t rely on being able to find tenants for your property.
Renovations and Maintenance
Buying an older house in need of work can be an excellent real estate opportunity for those prepared to put in the work.
The return on some cosmetic work can be exponential. But be sure that the underlying structure of the house is solid.
If you buy a property that has continual issues, like plumbing, electrical or foundational, you can lose both money and time to addressing issues. This can quickly remove any of the benefits of having an investment property.
Property maintenance needs to be considered, as well. A large yard with trees and a water feature may look beautiful, but it must also be managed. Consider either the time required or the money needed to hire a team to maintain the property.
An investment property need not be a hands-off experience. An exciting real estate opportunity is to buy a vacation property that can then be rented to help subsidize costs.
Bearing in mind the lessons above, if you have a preferred vacation spot that has a tourist draw, it may be worth owning a property. One of the great things about this is that the same features that would make it a more attractive vacation spot benefit both you and your potential renters.
A real estate opportunity like this can pay off both monetarily and with lifestyle experience.
Final Thoughts on Real Estate Opportunities
Real estate offers a unique opportunity over other types of investments in that it gives you ownership of a property that needs to be managed by you instead of a financial advisor. As we’ve demonstrated above, this has both benefits and dangers.
Considering the points laid out above will help you to make informed and intelligent choices, leaving you free to reap the benefits of such an investment while helping protect you from the potential risks.
If you have any questions about real estate opportunities, give us a call. We’re always here to help.