What to look out for when buying properties

What to look out for when buying properties

I get asked a lot of times by many of my clients, what are the things to look for when investing in real estate. To be honest, they are quite a number, but these are the ones that come on top for me

1. Location, Location Location- This is quite cliché but it is still very important. If this area is close to the beach, transport hubs (such as airport) markets, private or government developments, good roads or new roads etc. chances are those areas are going to blow.. Meaning they will appreciate in value

2. Valuation of the property- This is another very important thing to note. There are several ways to know the value of the property . One is Sales comparison( comparing price of the property to a neighboring property), second is cost of land and construction less depreciation, third is income approach which is based on expected cash flows. You should do a proper research on the property you want to buy, don't just swallow what the agent tells you, hook line and sinker

3. Investment Purpose- You need to be clear on why you are investing. For instance, is it a buy and self use, buy and lease, buy and sell (short term) buy and sell (long term). Overall, you need to be very clear on the use of the real estate

4. Expected cash flows and profit opportunities- You compare the expected cash flow from the property and the intrinsic value appreciation of the asset

5. Be careful with taking loans- Even seasoned developers and investors sometimes get overleveraged. You need to determine the best type of loan for your business and also shop for lower interest rates

6. Indirect Investment in real estate- Nothing everyone subscribes to having physical real estate. You can invest in REITS, mortgage bond, USA company stocks amongst others

7. Overall Real estate market- The real estate market can alternate from time to time. It pays to be aware of change.one prices and home sales (overall and in your desired market)New construction, Property inventory, Mortgage rates Flipping activity and Foreclosures

8. Overall Real estate market-As with other types of investments, it's good to buy low and sell high. Real estate markets fluctuate, and it pays to be aware of trends. It's also important to pay attention to mortgage rates so you can lower your financing costs, if possible.