Real estate continues to be, and will probably always be, one of the most common forms of investments. The real estate market is constantly improving, with house values increasing. There will always be people who prefer to rent. There will also always be businesses that need commercial space to rent. Real estate can be a great investment opportunity, as long as careful consideration and research goes into the process. Consider the following property needs before choosing your real estate investment.
Investment or quick flip?
Do you intend to turn the property into an investment, such as a rental home or commercial office space? Would you rather put some money into it and immediately put it back on the market? Both types of investments require a specific property. When looking for quick flips, for example, you want to find something that needs minimal work, but that can produce an increase in property value with some minor construction.
Rental properties, on the other hand, require specific housing regulations that are set by the city. Office spaces may require minimal efficiency ratings or bathroom and kitchen regulations. Your rental house may be subject to annual inspections to ensure that you are providing your tenants with a safe and healthy property. Rental properties also require screening applicants and budgeting for damages.
Office space needs
If you choose to purchase an office space for lease purposes, you will want to evaluate the surrounding businesses. The surrounding businesses will set the type of market that you will create for a tenant. For example, if you are surrounded by warehouses, you may want to consider the opportunity to lease warehouse space. If your property is surrounded by retail offices, however, having the ability to lease retail space may be more valuable.
Desired tenants
The type of real estate that you purchase will also set the tone for the type of tenants you acquire. If you purchase a condominium in a university area, you are likely to attract students. If you purchase a 2,000 square foot house in a suburb, you may find that larger families are interested in your property. The same criterion goes for office space and leases. Keep housing needs in mind for the best real estate decision.
Financing
Your financing may also affect the type of real estate that you are able to purchase. Some loans are specific for first time homeowners who intend on living in their house purchase. Other loans, which often require better credit scores and higher down payments, allow investors to purchase secondary investment real estate properties. The residential brokerage industry received nearly $68 billion in gross revenues in 2015, up slightly over 2014 results. A large percentage of these revenues come from investment office space and residential leases.
If you are unsure about how financing will affect your real estate choices, you will want to work with both your lender and a real estate professional. They can provide valuable feedback and assistance throughout the entire buying process. In fact, 30% of people interested in real estate investments said they would be more likely to invest if they had access to a real estate investment professional for advice and guidance.
Your ability to lease or sell
Although real estate properties can be great investments, they can also lose you a lot of money if not prepared. Purchasing the property is only the first step. Once you own the real estate, you will have to market it for lease. Every month you are unable to rent your business space for lease, the mortgage payments come from you. If you are unable to effectively market your commercial office space for rent, you may be forced to sell. If you decided to sell, you will have to be knowledgeable enough to make appropriate updates to increase the resale value. Knowledge is important in the real estate business.
Real estate investing is a great way to make money. A study found that nearly all (96%) who have invested in real estate believe their decision helped them achieve some sort of financial success. As long as careful considerations and effective planning take place, you are likely to find that the real estate industry is a great investment opportunity.
