Real estate investment can be highly profitable, especially as land values continue to rise steadily. However, success in this field requires a solid understanding of key elements such as property location, market value, potential returns, and the overall purpose of your investment. At 10 Properties in 10 Years, our Real Estate Financial Advisor and Property Mentor in Melbourne outline the essential factors every investor should consider before making a move — ensuring your decisions are informed, strategic, and aligned with your long-term goals.
1. Location of the property
Location plays an important role in any investment in the real estate business and you need to learn if investing in the locality would be profitable for you or not. Such as (green views, scenic, neighborhood status, near markets, and freeways) matters a lot for the property valuation.
2. Valuation of the property
When you are about to purchase a property you should analyze the investment, listing price, insurance premium, and taxation charges make the value of the property. You can compare the valuation of the property by recent sales with similar characteristics whether it’s old or new.
3. Investment purpose
While investing in the property is financial distress sometimes and cause unexpected results if the investment is mortgaged. Always choose the purpose and plan accordingly such as buying for self or sale, rented, or lease.
4. Expected cash flows and profit opportunities
You need to project different modes of profit and expense as cash flow refers to how much money is left after expenses.
• Expected cash flow from rental income.
• An expected increase in basic value due to long-term price appreciation.
• Benefits of depreciation.
• Cost-benefit analysis of renovation before sale to get a better price.
• Cost-benefit analysis of mortgaged loans vs. value appreciation.
5. Know the pitfalls and beware leverages
If you are investing in a property by taking loans then you must understand that the interest will spread to years so decide wisely if you can handle the loans. You must consider the following things before taking loans
• Use a mortgage type that suits you best like fixed-rate, zero down payment, and interest only.
• Read carefully terms and conditions.
• Search and bargain the best interest rates.
6. New construction vs. existing property
While comparing the old and new property you will find out that new property may have modern amenities, delays increased costs. Whereas the existing property has established improvements, lower costs, and faster access. There are many things related to the property sites like rented one, on a lease, free markets renewals, and other fixations of utilities.
7. Indirect investments in real estate
There are many sectors of the property allows you to invest indirectly through such ways
• Real estate investment trusts (REITs)
• Real estate company stocks
• Real estate sector-focused mutual funds and ETFs
• Mortgage bonds
• Mortgage-backed securities
8. Overall real estate market
Buying low and sell high as the market keep fluctuates so beware of trends.
Real estate is a tough form of business but with right knowledge and decisions, you can make some healthy wealth. To get professional help, reach out to the expert property investment strategists at 10 Properties in 10 Years. Call now at 1300 617 677.