Property Investment Opportunity – 5 Questions to Ask

Investing in real estate can be a fascinating and potentially profitable decision. How do you recognize a good property investment opportunity? It partly depends, of course, on your own needs and desires. There are, however, several questions you should be able to answer before you commit to investing in any property.

1. Are You Familiar With the Location?

It’s best to invest in an area you are familiar with. At the very least, you should see it in person before making any decisions. There are many factors that can be important in regard to location. What is the climate like year-round? If this is a commercial property, is there a “down season?” What is the general economic situation and are there any reasons it is likely to improve (or worsen) in the near future? Is it a safe area? If it’s a property where you will be spending much time, you should also make sure you feel comfortable there.

2. Do You Know All the Critical Facts About the Property?

Whether you are investing in a residential or commercial property, be sure that you have considered everything that might effect the value, or your ability to use the property in the way you intend. This includes the materials used in any construction, plumbing, electric, sewage, water, parking, and any relevant zoning permits that might be needed depending on the use. If you are considering an off plan purchase, be sure to find out if all essential legal permits have been granted.

3. Have You Researched All of the Financing Options?

The most obvious place to go for financing is your bank or another lending institution for a loan. However, if you are not able to secure the kind of financing you need, there may be other possibilities. You may be able to find an investor partner. In some cases, the seller will help you by taking a note in lieu of part of the payment. There are also property investment clubs that can offer buyers a better deal by using the pooled resources of members. You may want to consider all of these, and possibly even other options.

4. Do You Have A Profitable Plan?

While investing in property can be very lucrative, some investors do not do thorough enough, or realistic enough calculations of their expenses in relation to the money that the property will bring in. Remember that expenses are a certainty while returns tend to be more unpredictable. If your plans to profit assume, for example, that you will be able to fill up your property with tenants right away, be sure that this is realistic.

5. What Are the Long Term Prospects?

Have you thought about how long you might like to keep this property? Is it something you want to turn over as quickly as possible to make a profit? If so, check to make sure that the current market is likely to support this. If it’s something you want to get into for the long haul, make sure the property is one you want to live with for a long time.

If you can satisfactorily answer these five questions about a property investment opportunity, you stand a very good chance of making a good decision.