Investing in property remains as sensible as the day American industrialist Andrew Carnegie stated that 90% of all millionaires got their wealth from owning real estate. This is because it consistently increases in value over time and isn’t vulnerable to short-term fluctuations.
However, not all real estate is a sound investment. You first need to learn how to identify good investment property.
Here are key considerations to make in maximizing investment returns:
Right timing
As an investor, you should be aware that the property market moves in cycles. Property values can rise or fall due to several factors, such as economic movements, seasonal activities, sudden events or upheavals (e.g., elections and the pandemic), and more.
Doing your research, keeping your ears to the ground for developments inside and outside your area of concern, and discussing with your agent will help you to know where the market is within the cycle. This way, you will be able to acquire a property at the most reasonable price.
Right location
In acquiring a good investment property, location plays a big role. Your options should be limited by whether you plan to actively manage, say, a commercial real estate in New Orleans or hire someone to do that for you.
If you’re going for the first option, it’s best to look for a property that’s not too far from where you live with the help of a realtor in New Orleans LA. Also, consider these other location-related factors:
- Close proximity to schools, public transportation and facilities, shops and markets, and leisure hubs;
- Population growth and future development;
- Property taxes;
- Crime rate;
- Susceptibility to natural disasters and insurance average costs; and
- The number of listings and vacancies that could mean an upward or downward trend in the neighborhood.
Right type of property
In buying real estate for widening your asset portfolio, secure one that will be in continuous demand by potential tenants and future home buyers. Keep in mind also the appropriateness of the property for the average age of residents in the area.
For beginners, the ideal choice is generally a single-family dwelling or a condominium. Single-family homes usually attract long-term renters, while condos are considered low maintenance because the condo association usually takes care of external repairs.
Right profit and resale value
When you are ready to acquire a property, decide based on finances and logic rather than emotion or influence. You may end up with a bad purchase that will result in capital growth below the market average or rental income that’s not enough to cover the monthly maintenance costs.
Opt for a property with a good potential to appreciate in value and give a steady cash flow. The appreciation potential is achievable if, after a few touch-ups and repairs, the property can attract tenants who can pay higher rents and raise its value by the time you decide to sell.
You can also earn more from your investment if you are able to buy it at a reasonable price, ideally, for not more than 12 times the annual rent you expect to get.
One worthwhile place to start finding a good real estate investment is Covington LA. To learn more, get in touch with Axis Realty Group by calling 504.336.3000 or sending an email to Nicole(dotted)AxisRealty(at)gmail(dotted)com.