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7 Factors to Consider When Investing in Real Estate

Real estate investment can be incredibly lucrative when you know how to go about it in the right way. If you’re interested in learning more about making real estate investments, it’s important to consider these seven factors first before diving into any deals.

1) What is your objective?

Your objectives will help determine the steps you need to take. For example, if your goal is to make a long-term investment or supplement your income, the strategies for each will be different. You should have a general idea of what you want out of investing in real estate before exploring potential investments. Check out our other blog posts on finding and analyzing properties, financing considerations, as well as tax implications when investing in rental properties.

2) How much do you have available?

If you don't have a large chunk of change available for your investment, think about what you can do with your available money. In most cases, you can get started investing with as little as £1,000 or so by purchasing stocks, bonds and other securities through an online brokerage firm. You might also try investing in peer-to-peer lending sites that offer lower interest rates than banks but higher interest rates than the average person could get by putting their money into a savings account. Another option is to buy CDs at your local bank that yield a better rate of return than typical checking and savings accounts and they allow early withdrawal penalties.

3) Where do you want to buy it?

The first thing to consider when investing in real estate is your comfort level with investment risk. This will determine which type of property you're able to invest in. Are you interested in flipping residential homes, or just want to buy a place for your family? If you've decided on the latter, then you'll want to start thinking about where and what type of properties are available for purchase. Many different neighbourhoods offer a wide range of opportunities and prices and it's important to find one that suits your needs best. For example, if you plan on commuting by public transportation from home, then it would be wise to find a property close to public transportation, work centres or both.

Always do good research, ask relatives or friends to find property for sale and don’t be hurry about investment.

4) What can you afford?

The first thing you should do when deciding if now is the right time to invest in a new property is to think about what you can afford. It's important that you make enough money from your job, your side hustle, or any other source of income for you and your family so that you don't have to take on any more debt than necessary. This will help give you some freedom as an investor so that any deal you strike doesn't feel like a death sentence and puts less pressure on the success of the investment. 

The second thing to consider is how much debt you already have, whether it be mortgages on other properties or just credit card debt, which can often become quite high if not watched closely.

5) What should it be used for?

Investing in real estate can be an intimidating prospect, especially if you're new to the process. You need to do your research and ensure that you can afford the property. Plus, it's essential to understand how investment properties are taxed so that you can account for potential costs down the line. The following is a comprehensive list of factors for consideration when investing in real estate

1: Is the house or property in a good location?

2: What is the monthly mortgage payment?

3: What will my yearly taxes be?

4: Can I afford this expense each month?

5: Is there something wrong with the house or property that I'm not aware of? (i.e., sloping land)

6) What are the local trends and laws?

When investing in real estate, it's important to consider the local trends and laws. Is the area saturated with high-priced condos? What's the average cost of rent? Are there a lot of property disputes? Will zoning allow you to do what you want with the land? And are they likely to change?

7) What kind of property do you want?

Do you want commercial property, a house, or a condominium? What kind of property do you want? Commercial properties are typically rented out by the square foot and will offer great cash flow if you're looking for an investment that generates passive income. Houses provide the potential for long-term growth (and are fun!), but they come with more upfront work like renovations and furnishing. Condominiums, while they don't allow homeowners to customize as much as they might want, come with one or two low monthly payments and resale potential. What kind of property do you want? You will see property for sale in your search area but you have to take only what is suitable for you.

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