5 Things You Should Know Before You Make a Real Estate Investment



A blind real estate investment might end up making no profit as per your expectations, but it’s all in vain. Whether you are buying a property to earn rental money through it or for living purposes, you surely have to take care of the indicators that play a vital role in the real estate economy. Let’s get to know the indicators that would help you to optimize your real estate investments.

1- Keep an Active Eye on the Life Amenities Offered 

The world is a global village nowadays. Just by getting offered promising businesses and job opportunities, millions of people have to make inter/Intra country movements. When the matter is about deciding to buy home in Dubai, it is one of the emerging markets where skilled people are always on demand to cater to the demands of thousands of international businesses. So, you might be the one who is willing to make a switch to any part of the world.

You surely have to grab a living space whether on a rental basis or taking ownership of it. In the second case, you must take care of the life amenities being offered in an area where you are willing to buy your property. You should take care of the amenities being offered that best meets the requirements of people from all over the world. In the long run, your wise decision will surely help you to be offering the promising appreciation value/rental income and much more related.

2- Choose the Emerging Neighborhood 

An emerging neighborhood might help you to scale your real estate investment. High time to know how you will know either a property lies in an emerging neighborhood or not. You just need to actively evaluate the mega projects currently running in the premises of the target area. For instance, the government of that particular state has decided to establish an industrial zone near that residential spot or an airport that is going to be built in the future. It will help you optimize your decision about buying a property. Any intra-city connectivity project adds more value to a property value. This is how you will keep a check on the emerging neighborhood of the target real estate property.

3- Rental Growth & Rent to Price Ratio 

Rental growth is one of the decisive factors for all those who are willing to buy a property that makes them income through rental income. First of all, you must know the rent to price ratio of the property. It is typically calculated as the ratio of median rent to median price. Median rent is typically calculated on per yearly basis. Most often, the property with an average value of 7% rent to price ratio stands to be good for the investors who want to make money through rental income.

Rental growth should be the next move to know if you intend to make rental income through your property. It is typically the appreciation in yearly rent after each year passing by.

4- Appreciation Value 

The emerging neighborhood is the first-ever determinant that decides the appreciation value of a property. Residential properties that have an appreciation rate of 5% often stand to be emerging to buy it right now. The employment rate is another factor that decides the appreciation value of the property.

5- Vacancy Rate/ Occupancy Rate 

The vacancy rate is typically the ratio of the number of units vacant to the total number of units available. This might not be the case for you if you want to buy a home for living purposes. It would be an immediate factor affecting the economy of the property if it’s solely bought for rental income.

Final Thought

These are not only the factors impacting your decisions about purchasing a real estate property. The critical evaluation of the target property based only on these factors would surely help you to make a wise choice. The decision might not be immediately profitable if you make a purchase based on these factors but it would obviously be paying you in the long run. Make sure the real estate property should be driven by these rules of thumb.

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