Real Estate

How to Know if a Property is a Good Real Estate Investment

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Making a real estate investment can be a hard decision. This is especially the case when you have to think about your financial situation, your emotional health and even where you want to be in the future. After all, the decisions that you make now will really affect you and you may even find that they have a long-lasting impact on your life. So if you want to make sure that the investment you are making right now is going to be a good one then here are some tips to get you started.

1% Rule

When you are making an investment, you have to know what you plan on doing with that property. For example, whether you want to rent it out, whether it is a commercial property or even whether you want to try and flip it on the market. When you have this information, you can then begin to construct a strategy. If you plan on renting out the property then the 1% rule is a great way for you to get started. This basically states that the property should rent for 1% of the value to make sure that you get a good return on it every month.

Location

Location is everything when you are choosing a property. You need to buy the worst property in the best area you can. After all, you can renovate a property with ease and you can also do the work on the structural issues that might be present as well. You can however never change the location. Sure, older countertops may look unsightly and you may even feel as though they are going to hinder your investment but if you are able to put the work in then you know that you can turn it into something beautiful.

 

 

Cap Ratio

The cap ratio is the price of the home when compared to the earning ratio of the neighbourhood. There are sometimes reasons why some sellers seem to be more motivated when compared to others. Price drops can mean a good buying opportunity but it also signifies that the buyer cannot afford to live there anymore. If you want to try and get around this then one thing that you can do is analyse the other streets in the area. Think about it, if you did renovate the property and do it up, are there people in the area who would be willing to pay the price? Can people even afford to buy a property for that price? Little things like this can make all the difference to your investment and they do need to be taken into consideration.

Of course, if you find that real estate is far too stressful then you can easily look into

CMC Markets to try your hand at some quicker, lower risk investments. This is a great way for you to get to grips with the idea of investing and the decisions that you are going to have to make along the way so do keep that in mind.

 

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