September 27, 2019 Last updated September 26th, 2019 107 Reads share

How to Choose the Right Real Estate Investments

Choose the Right Real Estate InvestmentsImage Credit: DepositPhotos

Have you ever wondered how some investors manage to buy exactly the right property in the right location at the right time? You can be sure that they determine their buying criteria before searching for the perfect deal and understand their parameters when it comes to price, cash flow, ROI and more.

Buying the wrong property can have serious consequences, so here are some tips that can help you to choose the right one.

Get your timing right in the economic cycle

Most successful investors do not buy too close to the top of the economic cycle. They buy when others are selling and sell when others are buying. If you buy at the peak, you may have to wait a long time to see growth in your investment or even experience an initial decline in the value of the property.

Look for growth areas

Multiple economic factors drive population growth and push up property prices. Look for areas where expansion is occurring in terms of population, local infrastructure, and the economy.

Strong demographics in an area mean you will be able to get sustainable rental income growth. Where there is demand, there is growth and that’s where you can make money.

Research the area

You need to get to know your potential investment location thoroughly. Review vacancy rate data so you can invest in areas with low vacancy rates as this limits your chances of your property standing empty between tenants. Find out about the average rentals in the area so you can determine whether your purchase will be financially feasible.

Check out where the most desirable streets are located so you can purchase the very best buy-to-let opportunity. Look at where parks, gyms, restaurants, public transport, and other perks are located. No-one wants to live in areas with high crime rates, so make sure you look at crime statistics for the neighborhood too.

Choose the right type of property

Find out which type of property is performing the best in the area in which you plan to invest. You want your property to appeal to those looking to rent in the area. If the local market is largely families, it would probably be better to buy a house than an apartment.

You may decide your best bet is to invest in commercial real estate. Again, past performance is a good predictor of what could happen in the future. Getting advice from industry experts and experienced investors is also wise.

Consider how much maintenance will be necessary and how much you may need to spend on repairs. Some properties require more upkeep than others.

Keep an eye on the future

You can often find online proposals for infrastructure projects on government and council websites and local councils can give you more details. Keep an eye out for residential developments that could be going up near schools or shopping hubs or for new developments that could hurt the prices of surrounding properties.

Examine the numbers

Many investors do all the research and follow the perfect selection formula but they allow emotion to drive them instead of running the numbers. You need to base your decision on finances and not on a feeling.

When your cash flow is tight, it’s important not to go into the red when you buy. Some markets are great for capital growth, but they are expensive to buy into and expensive to hold. Buying a reasonably priced property and in a good location is key to ensuring profitability. When you find the right property, make sure that you’re being realistic and that your finances are healthy enough to that you can wait to start generating cash. 

Real Estate Investments – DepositPhotos

Brian O'Connell

Brian O'Connell

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