30 Aug How to Identify a Fantastic Investment Opportunity in Real Estate
Whether you are a serial investor, or you are looking to get started with the world of real estate investing, one thing is certain – you want to be able to identify great opportunities and take advantage of them real quick.
That’s what investments are about right?
A great investment opportunity in real estate is one in which the property is guaranteed to bring you high returns on your capital investment, as a result of the value it accrues over the shortest possible time.
And the value of a property stems from both its current and futuristic demand. That is, what people are willing/will be willing to pay to live in it or own it in the nearest future.
In this post, we will show you quick ways of identifying a fantastic real estate investment opportunity. You may also choose to refer to them as key indicators of appreciation in real estate.
Let’s dive in!
Location is the first factor to look out for when considering a property for investment.
What is it about the location that we advise you to pay attention to?
First, we want you to know that the location is all that matters when forecasting or predicting the future profitability of any real estate investment.
It can be referred to as the biggest indicator of appreciation for all investments in real estate.
For example, let’s compare the value of a four bedroom duplex in a prime location of your city with any other four bedroom duplex (of the same features) in any other part of the same city.
The difference in amounts is simply an indicator of the value brought about by location.
Does this mean that you should only invest in properties located at the heart of the cities?
However, it is important to note that properties obtain their primary value (and hopes of appreciation) from their location first. Consequently, when considering a list of alternatives, it is advisable to give preferences based on the proximity of a property to prime locations.
2. Population Growth
Having considered the importance of a property location in relation to its profitability, another factor that cannot be overemphasized is the influx of new residents to a particular location.
When a community experiences an influx of new residents, either owing to the construction of new industries or the availability of new infrastructures, the value of real estate properties (both residential and commercial) in that neighborhood can skyrocket by up to 50%.
Qualitative research has been carried out in this regard and we have made the report available for you. Click here to view the report
So, while scouting for properties in prime locations, it is also important to look out for neighborhoods that are drifting towards becoming new prime locations.
Indicators of developing communities include population growth, provision of new infrastructure, construction of industrial areas, and so on.
3. Facilities in the property/estate
Another indicator of appreciation that you should look out for before investing in any property is the quality and quantity of facilities available.
These facilities could be recreational, commercial, functional or aesthetical. However, it has been proven that properties with great facilities will perform better on the market than properties with minimal or no facilities at all.
These facilities could be private or communal, depending on the nature of the property. Nonetheless, their presence communicates an additional stretch of value, which is also an indicator of what the property will be worth in the nearest future.
Some facilities to look out for include recreational facilities like a swimming pool, gym, sport pitches and courts, green areas, etc. Other essential facilities that make the property functional include electricity, water supply, underground drainages, underground cabling systems, good road networks, security, etc.
As a rule of thumb, at Hall7 Real Estate, we believe that a fantastic real estate investment is one in which you can recover your capital investment within a period of 20years, or less.
So, a quick sign for you could come from running the numbers.
Let’s do the math.
Simply divide the capital value of the property you wish to invest in by twenty.
Now ask yourself, can I get this in rental income annually?
If you’re honest about your answer, you’ll know if you should go ahead with the investment or not.
5. Market conditions
The market conditions change from time to time, and more often than not, it is usually a reflection of the economic conditions at the time. And varying market conditions favor investors at different levels of the investment chain.
For instance, if you are selling a house, high property prices are a good condition. On the other hand, if the market seems to be crashing and property prices are low, it is a good time to invest but a bad one to sell.
However, in a situation whereby the national currency is consistently devaluing against the US Dollar and inflation is the nucleus of the economy, investing in real estate is a fantastic way to hedge your funds against inflation.
This post has shown you 5 signs that would help you to spot a fantastic real estate investment opportunity real quick.
Now it’s your turn.
We love to hear from our readers.
What other factors do you consider when determining a good investment opportunity?
Let us know in the comments.
We promise to look out for your comment and respond to it.