Real estate, being a legal term refers to the property consisting of land or buildings. Real estate, in a developing economy like India, is found to be crucial where it is the second largest employer after agriculture. With relatively low liquidity, real estate investment is considered to be less risky when compared to other types of investments.
Following are some key factors to be kept in mind while investing in real estate.
The Location of the property
Location of the property is a crucial factor which determines the profitability of investments in real estate. The significance of the location decides the resale value of the property. It is the striking features of the location of the property which lure your buyer. Proximity to general amenities like transportation, educational institutions, and hospitals is crucial while considering a residential property. Lord Harold’s quote about location informs us about the importance of the location of the property in real estate investment.
Returns
While choosing a property, you have to keep in mind the returns of the investment. It is the returns that define your future economic status. Low capital growth, the high cost of property maintenance will be the results of wrong purchase. Doing good research to find a perfect strategy for investment is always advisable in order to be on the safer “economic” side. As time progresses and real estate has become a lucrative business, there are several agents and businesses that can offer you all the advice you need in order to make the right choice while investing in real estate.
Economic stability
If there is a hike in your salary, it can’t be seen as a right point to invest. You must ensure that your future income situation will be favourable. Once you feel economically stable, you can move forward with the idea of investing. As Marshall Field has pointed out, buying real estate is not only the best way but also the quickest, the safest and the only way to becoming rich. Since it also involves a certain risk, it is better to keep an eye over one’s own financial status before investing.
Market Evaluation of the Property
Property market evaluation is a fundamental factor in real estate investment. By taking all relevant investment aspects into account, you are expected to evaluate the property market carefully in order to minimize the risk involved. Real estate valuation is what determines tax, investment analysis and insurance premium of the property. Thus, you have to familiarise yourself with long-term profitability objectives before investing in real estate. Sales comparison approach, cost approach and income approach are the mainly used property valuation methods.
A real estate investment is a crucial decision taken in a person’s life which aims at greater economic benefits. With regard to investment, you must act at the right time and it will have its due result. Whatever steps are taken or strategies adopted, it should be carried out carefully. Thus you may consider the aforesaid factors in order to make your real estate investment easy and fruitful.
