Friday, September 27, 2013

Safeguarding Your Real Estate Investment

Investing in the real estate markets has become an increasingly viable option, given the persistence of recovery in the housing markets. Ordinary people are buying second homes to rent or renovate, while serious investors are returning to real estate as a potentially lucrative basis for their investment. For those who choose to invest in real estate, safeguarding and maintaining the value of the investment is essential. Homes can deteriorate if left unchecked, and apartments can easily fall to ruin. At the same time, simple errors in your investment strategy can leave you exposed to turmoil in the local market.

For this reason, cutting it in real estate investment now requires a more discerning approach, with not every property guaranteed to turn out to be a winner. So how can real estate investors find the right properties to deliver growth in the value of their investments?

Image source: http://www.signil.com/wp-content/uploads/2011/01/investment-property.jpg

Finding the right properties is the first, and arguably most essential element of safeguarding your investment in real estate. Finding the right type of property for your target market will ensure that you can find tenants to rent from you more easily. For example, opting to buy an apartment with six bedrooms and only one bathroom  can be very challenging to source willing tenants. However, where your property more accurately meets the needs of the local market, you will notice it becomes easier to sell and rent your property for a return on your investment.

Location is crucial to the value of a property, and many investors are already familiar with the link between location and real estate prices. But these relationships are fluid over time, and any buyer should think about the longer term. Some locations are on an upward trajectory, experiencing local regeneration and growth. Other locations are more visibly in decline, as the demographic and commercial landscapes continue to shift and develop. Choosing the location for your investment property is also crucial – some apartments can go years without being let, whereas the apartment across the street will go overnight. For some buyers, location is everything.

Think about the desirability of the investment property you are considering buying. Why would people choose to live there, and would you live there personally? What value are you providing that justifies your investment? Do local amenities make your real estate a sound strategic choice? Some apartments and homes will sell themselves, simply by their location or their appearance. Within the parameters of your budget, it is worth striving to attain this level of desirability in your real estate, with a view to attracting higher rental rates and a greater local interest in your property.
Image source: http://images.businessweek.com/ss/09/02/0213_dividends/image/real_estate.jpg

Many new property investors take a hands-on approach, spending their own money to partially or wholly renovate the real estate they buy. This can increase the resale value, while making a property a more attractive place to live. Some people even choose to invest in properties that require more extensive work, before working through the renovations to increase the value of their investment. On a strict budget, this can be effective. However, it may be valuable to work to professional valuations and estimates, so you can be realistic about the financial gains of this kind of strategy.

Short of renovating your real estate, the actual presentation of your property will also have a bearing on how it is received by potential tenants or buyers. You don’t have to spend a great deal of money on your real estate to overhaul how it is perceived by its target market. Remember that you are up against other homes being marketed locally
it is unsurprising that properties with stronger interior design sell and rent quicker, and at a higher value. Even subtle things like d├ęcor, flowers and throws can make the difference between securing the future yield of your investment.

Real estate investments can be among the most lucrative opportunities for investors, in both rental and sale markets. A long-term tenant can pay off a mortgage on the investment, while the value of the property fluctuates with real estate prices. With the right choice of property, this can provide significant returns over both the short and long term.

However, the housing market has been suppressed in recent years, following on from the crash of 2007. But with demand returning to the markets, through both investors and homebuyers alike, residential real estate is becoming an increasingly favored option for those with capital to invest.