Property investors must consider the type of property, costs, location and future potential when looking for ideal real estate investment opportunities. While no property investment is a certain winner, investors can take some precautions to ensure they maximize their chances for success. Without doing the proper research into these key areas, a property investment can be a shot in the dark. Given that many real estate parcels can be quite expensive, property investors should take time to sort through all the issues.
Different property investors invest in different kinds of real estate opportunities. Some feel more comfortable buying rental properties that are ready to go. Others may buy homes needing repairs, make those repairs and then attempt to sell them at a higher price. The least amount of work involves just holding onto a property in anticipation that an area will soon experience growth and development. Foreclosures offer another opportunity for property investors to buy low and sell high.
Costs are a major factor in any investment property, no matter what the situation. For property investors who are financing their investments, the mortgage payment is only part of the actual costs. Owners must take into account homeowner's association fees as well as property taxes. If trying to fix a property, each improvement must be measured and compared to the potential added value. Not every improvement will add to the value of the home enough to pay for the cost of the action.
To help keep costs down, there are a number of strategies property investors can implement. First, make sure any buildings on the property are lower maintenance. Second, buy outside the city limits, where property taxes are generally cheaper. Third, be careful of variable rate loans, which could be adjusted to a higher level in a relatively short period of time.
Location is another consideration, especially for property investors considering rental properties. Having properties in desirable locations will decrease the amount of time it sits vacant. If the property is close to jobs, entertainment and shopping, it could be considered a premium location. This could not only keep it rented more regularly, but also allow the owner to charge even more rent.
Future potential is something that is very subjective, but is often something investors often consider. If a property investor believes the area is poised for growth, he or she may buy land before that growth happens, and the property gets more expensive. This process could take decades to realize any substantial return on investment. In the meantime, the property will likely cost the owner money through taxes and financing.