Putting your cash into a commercial or residential property may seem like a no brainer in the modern climate. With property prices believed to be about to rise at double the pace of salaries and inflation, the risks and instability of the stock market and other vehicles seem pointless in comparison if you have the cash for a property. However, investing in property does also come with its own risks: there’s still no certainty that your investment will work, and the risks can become amplified if you choose a place in the wrong area or at the wrong time.
As a result, a wise investor will take their time before making a decision. It’s first essential to make sure that those other investment routes aren’t right for you, and it’s also wise to get some specialist assistance before taking the plunge. If you do set your heart on it, then you’ll need to think about the three key priorities: location, demand and prospects. This blog post will delve into these points in more detail and guide you towards a solution.
Be sure that it’s right for you
Before you rule out all of the other investment vehicles that you could go for, you should first double-check whether or not these are perhaps more suited to you. From selecting a tenant to ensuring that legal obligations are met, property investment can require some active management. If the idea of doing this makes you nervous or you’re simply too busy, then it may be worth choosing a hands-off tracker fund or some similar investment vehicle that doesn’t require a lot of input.
Take some advice
Before investing in real estate, it’s wise to make sure that you’ve received all the advice you need. You’ll need to consult several different professionals as part of your purchase, and there are too many to mention in detail here. As well as a real estate agent who can help you find a suitable location, you’ll also need an attorney who will handle the legal side of the transaction. It’s also worth using a professional such as a surveyor to find out whether there are any structural problems with your chosen property. Don’t be afraid to spend money on these sorts of professional advisors: in many cases, they can save you cash in the long run by identifying any potential issues as early as possible.
Location and demand
Once you’ve made up your mind to invest in real estate, the next step is to think about location. If you’re planning to live in the property, then you’ll obviously have personal considerations to make – and preserving your work connections and looking out for your family’s stability will likely be more important than commercial considerations. However, if you’re going to get a tenant in and you can cover the costs of hiring someone to look after the property, then your geographical options are much wider.
The US is a diverse country when it comes to location choice. Take The Canyons, Park City: a real estate guide for the area shows that everything from ski slopes to fine dining is on offer. This makes it ideal for all sorts of people, and this kind of diversity is something to look out for as it means that your property will appeal to more potential buyers and tenants. However, it’s also important to think about the commercial side of things. If you’re going to resell your property with the aim of making a profit, for example, then are you certain that there are enough individuals with that kind of purchasing power?
You should also give some consideration to the area’s future prospects as well as demand levels now. An area that currently has a lot of rental demand, for example, may only be that way because of a time-limited project from a local employer. If this was to change in the future, so might your rental income – so it’s worth assessing the prospects for demand from an honest perspective. If you’re struggling to find the answers to these questions through your own research, then it may well be worth asking your professional advisors to help you out.
Investing in real estate, then, isn’t going to be simple. Despite the headline statistics suggesting that property is a great choice for your cash, you still need to do the work to make sure that you choose the right area and strike at the right time. From assessing demand levels to seeking out advice, there are lots of steps that you need to take before pressing ahead.