We have heard of investors who have ended up making losses because they made the wrong choice of property. A good investment property must give you returns in good time. This only happens if it is better placed and it is well suited for the target market. Although these are some of the factors that will determine the success of your investment, other factors also play a role in making a profitable investment. If you choose right, you will be rewarded with high returns in terms of capital growth as well as rental income.
Here are few major considerations to make before purchasing a property:
1. Location of the property
This is the most important factor to consider when you are buying a good investment property. Most tenants or homebuyers would love to live in a well-connected area, with all the amenities and an established transport network. Hence, if you want to get the most out of your property, take your time to research the area where you intend to buy. If the property is near certain social amenities, its demand will shoot up. Here are a few things to look out for:
• Public transportation networks
• Schools
• Public facilities
• Recreational facilities
• Markets and shops
2. Tax rates for properties in the area
Property tax rates vary in different areas. You should research about the property rates in the area where you intend to invest in. It is important to know how much you will be giving the taxman. In some cases, high property taxes are not a scare if the area can attract long-term tenants. The two do not always go hand in hand. You can get this information from the local tax office or inquire from other homeowners in the neighborhood.
3. Rental returns
The only reason why you invested in the property business is to get rental income. Therefore, you ought to make sure the property will give you returns, which will take care of the maintenance costs as well as give you a handsome net profit. Some investors make the mistake of considering their emotions about a property when buying, rather than factoring on the financial outcomes. Evaluate the average rent rate of the location where you plan to buy a property. If you find that the standard charge cannot pay the taxes, mortgage payments and other related costs, continue looking for a good investment property.
4. Security
This is a concern for many tenants. Hence, you must assess the security situation of your area of investment. Nobody is willing to risk their lives and those of their loved ones by living in an area notorious for criminal activity. Get information on the crime rate from the library or the local police. Refrain at all costs from asking the seller of the property about the crime rates since they might lie to you. After all, they cannot wait to dispose of the house or the building.
5. Susceptibility to natural disasters
Once the seller hands over the property to you, one expense you will have to foot is the insurance. The premiums will be set depending on certain factors among them the susceptibility of the property to natural events. The more prone it is to natural disasters, the higher the premiums you will pay.
If you plan to invest in the property business, be sure to consider the above factors when buying. This will ensure that you secure a profitable property.
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