If you are looking for a place to invest in property, you might want to check different area statistics and pending development plans, to make sure that you get the best value for money.
You need to look for locations where house prices are likely to go up in the next few years, or you can get a good rental income from your homes. Search for middle-class neighborhoods where professionals are constantly looking for homes to rent, and places where you can get government funding for renovating run-down properties. Below you will find ten tips on how to do your search to get the best return on your real estate purchases.
1. Search for Growing Middle-Class Neighborhoods
You need to look for neighborhoods where middle-class people are likely to relocate to. Make sure that you look for job offerings, and the rate of population growth. You will need to check the target market for your property, and their preferences. For example, if you are planning on buying and renting out homes for young families, check what they are looking for, and what their preferred location is, based on commuting times, public transport, and schools.
2. Look for Cheap Property for Renovation
One of the best ways to double or even triple your investment is to buy a home that needs renovating and turn it into a buyer’s dream. If you already know your real estate location, check which features buyers are searching for. Look for inner-city neighborhoods that will attract young people who are looking to be close to all amenities and the nightlife, as well as the office. You might even find an old building that can be turned into multiple flats, and that way you can maximize your return on investment.
3. Check out Planning Permissions
It is important that you check the planning permissions in the area before you make an investment. If a large international company is about to open an office nearby, chances are that you will have no issues selling or renting the home. However, if an industrial unit is approved to be built nearby, you should not invest in family homes, but can rent out renovated, modern flats to working professionals.
4. Have a Look at Property Price Trends
One of the best ways of determining the future price of the property you buy is to look at property price trends in the area. Check the number of sales in the past 12 months, as well as the sale prices. If you can see an upward trend in the property type you are about to invest to, you can expect a good return. However, if the prices are falling, or there is a declining demand, you might want to choose another area to invest in real estate in. You can check the short-term and long-term trends on the Economist website, giving you an overview for each state and region, as well as monthly changes. To decide whether or not to invest in real estate in a region, however, you might need to talk to property experts who know your target neighborhood in depth.
5. Look for Areas with High Population Growth Projection
One of the best ways of determining future demand for properties in the region is to check the demographics of the area, and the population growth projection. If the population in the region is growing fast, chances are that the location is desirable, and the demand for homes is going to go up. If the population is ageing, however, you might find that the demand for new homes will decline over time, and you will not be able to sell the homes on fast. If there is a high number of 20-30 year olds in the region you are likely to invest into, you can expect these people to look for their own property over time. Check what the lifestyle of people in the neighborhood is, and keep an eye on property trends that influence their decisions. Pick your target market carefully to adjust your property to their needs.
6. Pick Popular Layouts
One of the most important things you need to check is the preference of your target market when it comes to layouts. Every generation has a preferred layout. Young professionals look for simplicity and easy maintenance, while young families want a large back yard for the kids to play in. Retired people might be looking for a low-maintenance home and a smaller home to reduce their monthly bills. Middle-class families with older children might want an en-suite bedroom, more rooms, and a large kitchen to satisfy the need of all family members. Young executives working long hours might be looking for an executive condo where they get all the services and amenities included in their bills. Check property websites and look for the most popular types of real estate, to offer something that your target market is looking for.
7. Offer More than Other Real Estate Owners
After you have chosen the location for your real estate investment, you will need to examine the competition. Chances are that there will be hundreds of similar homes for sale in the neighborhood, and you will want to make a profit as soon as possible.
To maximize your investment and reduce the time you have to wait until you can sell on your investment property, you must offer something extra that attracts potential buyers. For example, all the homes for sale in the area might have a front yard, but no parking near the property. If you purchase a lease of a parking space and add that to the package, your real estate will suddenly become more desirable than other homes. Similarly, if most properties on the street have three bedrooms and an open plan downstairs layout, you can create an enp-suite bathroom or a downstairs toilet to make your offer stand out.
8. Check Jobs and Economic Statistics and Outlooks
One of the best ways of predicting how desirable an investment real estate will be in the future is to look at the employment rate and median income in the area and the surrounding neighborhoods. If you invest in an area with families earning two average salaries, and having two kids, you are likely to have ready buyers for your property. The higher the income and employment rate in the area is, the more likely you are to find qualified buyers for your investment real estate. You can also check the economic outlooks of the state or neighborhood on your local government website, so you have an idea about the future demand. When money is limited, people tend to rent instead of committing to a mortgage deal, so you can make money from buy-to-let homes.
9. Compare Supply and Demand
When visiting national or regional property websites, you must check how many people are looking for a home, and how many houses have been sold in the past few months. Some of the sites will give you detailed statistics on how long each property type takes to sell on the average, and how many percent of the asking price owners can achieve. This way, you can understand the demand for your type of real estate, and the maximum price you can sell it for in a certain period of time. Look out for homes in the neighborhood that have been on the site for over 6 months. If there are multiple, you should look again to make sure that you are not going to be stuck with your real estate for a long time.
10. Calculate the Rent/Price Ratio
Having a Plan B in real estate investment is important. While you might be a property developer wanting to flip homes quickly and realizing a profit to invest it further, things don’t always go according to plan. If for any reason you are unable to sell the house in a few months, you might still get a high yield on renting it out. To calculate the Rent/Price Ratio, you should divide the investment price with the yearly rent. If you took out a buy-to-let mortgage on the home, you will need to start making repayments immediately, and renting out the house might cover your financial commitments, even give you some regular monthly income.
Buying houses and flats for improvement or renting out is a popular way of making money. You will, however, need to choose your location carefully, to avoid disappointment. Focus on supply and demand, demographic trends, and population growth predictions. Get to know your target market, and learn what they are looking for. Offer more than other real estate in the region, to make your offer stand out. Create contemporary layouts that suit the needs of your buyers, and target the right people when advertising. Look for homes with a high rent/price ratio, so you prevent losing money in case you are unable to sell on your real estate in a reasonable time. Remember to put yourself in your potential buyers’ shoes and understand their needs.
This is a collaborated post.