Last Saturday, I went to Lawrence Poh‘s talk on Real Estate Investment and I learnt a lot about real estate investment. I learnt about the criterias to consider when investing in Real Estate. Knowing the specific criterias is very important as they will help you make finer distinctions on whether the property you bought is a good investment or not.
Criterias to consider when investing in Real Estate
We often see people buying houses or we, ourselves buying houses. Do we buy our house based purelyon impulse, appearance or do we consider some specific criterias first, before we make a decision to buy or not?
Here are some criterias I learnt and think are good criterias to consider before you even start to make a decision:
Credit to HomeDesignFind.com
- Location- Extremely important as the location will determine whether the house you bought is worth that value or not. Some houses located in front of the sea may be more expensive as there is a good view of the sea thus, the price of the house may be slightly expensive compared to houses without a good view. Also, houses that are located near the rubbish dumps are much cheaper as the location of the house is not ideal. Also, if the property that you buy has many facilities and is easily accessible, the price of the property would be much higher compared to properties that do not have facilities and is not accessible easily
- Affordability- This concerns whether you are able to afford to buy the house or not. Often, this is one of the most important factor that decides whether you buy the house or not. Sometimes, even though the location of the house is good but we cannot afford the downpayment or monthly mortgage. Thus, we need to calculate our finances to decide whether we can afford or not. By keeping track of how much money you have will help you to consider how much you can spend.
- Property Management Team- If you are going to buy a house for investment, you should have a good property management team. By having a good team, the team will be able to help you get a tenant so that you can rent your house out and recieve monthly cashflow. The team also manages your house so that your house will remain in a good condition for future tenants to stay.
- Condition of the property- You should view the condition of the property before you buy. This is because property in poor condition means that the owner did not take care of it well thus, you can negotiate for a lower price.
- Demand and supply for the property that you are buying. By doing market research for the property that you want to buy is very important. By knowning the demand and supply of the property, you can study whether the property that you purchase now would be of huge demand or low demand, huge supply or low supply.If you bought a house and that house in the future, would have more demand but limited supply , the price of house would appreciate in the future. However, if you bought a house and that house in the future, would have more supply but low or constant demand , the price of house would be cheaper in the future.
All in all, these are the brief explainations of some important criterias you should consider before purchasing.
For more information about Real Estate investment, you can read Robert Kiyosaki’s book called The Real Book of Real Estate: Real Experts, Real Advice, Real Success Stories
