People often think that location is the only thing that matters before any real estate investment. But trust us, this is not the case. Yes, it is true in many regards that location is an important factor, but there are several other things that you should also consider. Consider the top real estate projects in Islamabad; it is not only the location that makes these projects stand out from the rest of the crowd. It is also the right time, the right investment, and property valuation.
Today we will be discussing in no particular order the prime factors which every investor should keep in their mind before they make this lifetime investment.
This goes without saying; location is hands down the most important factor that everyone should keep in their mind. Real estate is a market that thrives on the future. You need to be aware of the upcoming market trends, and you should invest in those market venues which will be of some value in the near future.
There are several factors that come with location. The continuous presence of amenities and security are all entitled to the factor of location.
Another factor that people also consider and is often under comes the umbrella of location is the scenic value of the property. This factor is of supreme quality because when we are talking about the residential plots and the investment in that sector, we have to consider the factor of how close that market and other facilities of life are to that location. So yes, location is of prime importance in real estate investment.
And in the case of commercial real estate investments, investors have to be cautious of the presence of freeways, transport, and market areas. So, make sure you keep these points in mind.
There are several areas where this factor comes into play. These areas are financing, listing price, and investment analysis. All this depends upon your property valuation.
So, you have to figure out the cost approach, which is the land and construction if we are to minus the depreciation. Moreover, property valuation is also of great importance because of the cash flows and the sales comparison.
The purpose of investment
Many invest as it helps generating income and grow over a certain period of time. Okay, let us answer this question once and in detail. Investors need to be aware of the purpose of their investment. Real estate investment is not a joke. The market with all its perks and opportunities is also quite a risky business. Because of its low liquidity and high-value investment, this is a place where the investments have to be made with great responsibilities. So, you have to be very clear in your head why you are making a certain purchase, either if it’s for a buy and self-use or if it’s for a buy and lease. The process may be quite the same, but the investment purpose is what makes all the difference.
For example, if the sole purpose is to buy and sell that is short-term, then you may not be focusing on the intrinsic properties; you rather make it luxurious to increase the market value. And if the purpose of your purchase is to sell it in the long term, there is no way you just have to focus on the outer look, but you also have to keep in mind the intrinsic properties.
There is a general phenomenon of cash flow. Cash flow is the amount of money that is left after all the expenses. So, a positive cash flow is all that you need at the end of the day. So make sure that you are on the lookout for profit opportunities when you are looking for huge market investment.
Whenever there is an increase in inflation, the rental rates will also increase, and this is a win-win. You should also have a profound understanding of the whole real estate scenario so that you can keep an eye on the tax benefits. Furthermore, make sure you are aware of the cost-benefit analysis and the loan appreciation.
Leverage and why it is important
Investors need to understand that no one denies the importance of loans, but loans come with a lot of baggage. Make sure you understand the complexities of such dealing because it is not a one-time deal. You are committing to a certain pattern for a longer period of time, and that is why you need to understand the importance of the matter.
These are some of the main points which you need to keep in mind before you move on with your real estate investment. Learn them and make sure to make good use of this information.