The purchase of real estate should always be considered as a major investment, not only because of the amount of money to be invested, but because it will affect your present and future life in a significant way.
When you buy a property, you should not only think about aesthetic, functional, or location factors; even if it is “your future home” and you intend to live there indefinitely, it is essential to use the investor’s hat to be able to foresee a series of situations and make the best use of the decision that is being made. An investor considers factors such as the attractiveness and resale facilities, the valuation of the property over time, the cash flow that the rent of the property will provide if he decides to do so, the time it could take to rent or sell the property, return on investment, etc. Let’s see then, how these factors affect buyers who are looking for their perfect home.
Do not get caught, learn about the restrictions: there are many communities that have restrictions on renting or selling. For example, communities only for those over 55 years old, those that prohibit rents or restrict them for one or two years after buying the property and those that restrict sales to Corporations or business entities.
Many people think that the restrictions will not affect them because at the time of purchase they foresee that they will not make any movement and will be there for a long time, but the reality is that nobody is exempt from unforeseen situations or changes in their work, company or family. These restrictions will affect resale capacity by restricting the market to which the property can be offered, such as for a specific age group, investors wishing to rent or corporate entities. Likewise, the ability to handle any type of economic situation through the rental of the property is limited.
Analyze the attractiveness of the area: the best way to guarantee both the value of the property and the attractiveness of resale, is to guarantee a desirable location. Examples of this are schools with good rate, sources of employment, parks and tourist attractions, location in relation to commercial areas and highways, crime indicators, cost of living, etc. Analyze statistics and use common sense to look for areas that appeal to important population’ sectors.
Evaluate the historical properties value: analyze the value of the property in recent years, existence of new buildings, inventory of properties in the market, this will give you a good idea of how your property can be valued and how long you should wait to resell. If you are in an area where there is a high inventory or many projects, you should consider it. In general, new projects help to value the property but you must wait for an opportune moment in which a good part of the inventory has been absorbed. In general terms in a real estate investment to get a good resale value will be after five years, always consider the medium term.
Do not leave out the analysis the rental values and vacancy time : check the values in which the properties are rented and how much time they spend sitting in the market, this will give you an idea of the attractiveness of the area, possibilities to rent the property if it is necessary and the rate of return on the investment (Cap Rate). It is essential that the rental value covers the expenses of the property: payment of the credit, taxes and maintenance of the property, in this way you guarantee your mobility in case it will be needed without having to go to a hasty sale.
Make sure you have a qualified real estate agent who has experience, service vocation and ability to provide you with the necessary information and advice to evaluate your investment.
Certified Investor Agent Specialist
EWM Realty International
2000 Main St. Weston, Fl 33326