Real estate can make a great investment, and is increasingly popular as real estate prices continue to rise. However, it takes some strategic planning to understand and act on a good investment property.
Get To Know the Region
One of the first steps in making a property investment is developing a deep understanding of local market conditions. This should either be broad, if you’re unsure what type of property you plan to invest in — or targeted, if you have a good idea.
For instance, if you intend to purchase raw land, it’s a good idea to compare land prices widely throughout a given county or region. You should know what factors put a higher premium on land prices. You should also work to develop familiarity with local zoning and building codes, to understand what is possible with a given property.
Naturally, you should follow similar procedures when considering other types of investment properties.
Speak to Locals
Speaking to local inhabitants is essential for coming to a knowledgable understanding of local conditions. Local residents can clue you into things you might otherwise miss: areas prone to flooding or severe storms, brokers to look out for (or seek out), town officials who are uniquely helpful or difficult to work with, and more. Tapping into this local knowledge base is one of the most effective tactics you can employ when looking to purchase an investment property.
Make a Comprehensive Fiscal Plan
By definition, an investment property is intended to be a way to make a profit — not necessarily a place to live or work long-term. Consequently, the financial components of your planned investment typically take precedence over all other concerns.
On the purchase side, this means crafting a sound business plan that will allow you to secure funding, whether from a bank or a private individual.
On the longer-term side, this means including in your plan a clearly described intention of how you will make money on your property. Maybe you intend to do a quick “fix and flip,” or maybe you seek to hold onto a piece of land over time for speculative value. Whatever your intention, it should be clear how you will have fiscal success with the property.
In short, property investment is a fun and often lucrative line of work, but it takes some planning. Carefully approaching a property to invest in will yield the most success over time.