Choosing exactly where to invest your hard-earned money can be a gamble. And although most kinds of investments are uncertain, investing in real estate is one of the safest routes to take for those who are just starting out on their investments journey.
The data shows there is a lot to be gained through real estate investing, but with seemingly endless options to choose from, how can you be certain that the property you select is destined for profitability? From location of the property to long-term maintenance costs, there are many factors to keep in mind when evaluating properties and envisioning how they can lead to a brighter financial future.
So, yes, while there are rarely guarantees when it comes to real estate investing, there are ways you can get ahead of the game. Whether your choose to conduct your own research or enlist the help of a real estate expert, familiarizing yourself with these prior to pulling the trigger on a property can save you a lot of stress in the long run. Here are 5 factors that might affect the profitability of your investment property.
Surrounding area
Location, location, location—the location of your investment property is one of the biggest predictors of whether or not it will earn you strong profits over time. Some properties perform well in the market because they are located in bustling urban areas, while others are in high demand due to their quiet suburban surroundings. Research is key to ensuring you choose the right type of property in a location that makes sense for now and in the future.
Crime rates
Safety is paramount when shopping for real estate. Choosing a property in an unsafe area riddled with crime can make buying or renting said property difficult to sell. If you want a property that will sell or be rented quickly, you’ll want to thoroughly research the surrounding area, crime trends over the past few years, and factors that might affect this in the future. By choosing a safe location, you are likely to find renters who will be happy to stay for the long run.
Property tax trends
It’s important that your real estate investment makes sense. Choosing a property with high property taxes, for example, can wreak havoc on your bottom line and prevent you from reaping the true benefits of your investment. To get the most of your investment, familiarize yourself with the current property tax rates and be vigilant about any changes to this while your property is rented Even a small rise in property taxes can become a cause for concern.
Quality schools
Where there are good schools, there will be good investments to follow. When dealing with a multi-family home, a lack of schools in your surrounding area can affect the value of your investment over time. This is definitely something you will want to consider when choosing a property you plan on selling in the future.
Job outlook
What is the job landscape like near your investment property? Areas of high job growth are likely to attract tenants, so paying close attention to the job market will help you make wise decisions regarding your real estate investments. A city’s downtown area, for example, is likely filled with plenty of places of business, giving your renters good opportunity if they are seeking jobs or patrons in the event that they choose to own a business. Keeping up-to-date with the latest news can also help you anticipate large companies coming to the area, allowing for a strategic approach to investing.
