Investment Properties. Historically, real estate has been one of the most solid investments a person can make. If you are willing to hold onto in investment property for a decent amount of time, your chances of turning a profit are usually very good. Here are some things to think about when looking at different investment properties:
Think Ahead – When looking at an investment property, think carefully about the future. Think about what sort of tenants you expect to have in the next 5 years, and how the neighborhood will grow and change. If you're looking at commercial property, try and find out what rents the tenants in the same neighborhood are paying (this can be easily done through real estate listings etc. . .) and what they used to pay 5 years ago. This will give you a good idea of how quickly the neighborhood is growing, and the type of growth you can expect with your rental income. Location, Location, Location – This is one of the oldest rules in real estate and remains true to this day. Remember that everything about the structure of a building can be changed, up to and including knocking it down and replacing it. One thing you can't do with a building, of course, is move it, so you're much better off with a lower quality structure that can be improved in a good location, than a great building in a poor location. You have to try and get an idea of how the neighborhood will change in 5 years. An ability to understand where things are going in the future is profitable in all kinds of investing, but doubly so in real estate. Avoid One-of-a-kind Properties – Unless you're working with a large amount of capital and can afford to have a hard-to-sell property, resist the temptation to invest in truly unique structures. While this kind of property can be very enticing, keep in mind that it's going to appeal to a much smaller market. So if you find yourself in the future needing to sell the property it could be very difficult to find a buyer. You want to invest in the kind of “flexible” property that will appeal to the average family (if it's a residential dwelling) or average investor (if it's a commercial or rental property.) Be prepared to stay in for the long haul – Don't tie up your cash flow in investment properties. Although everyone has heard stories, or knows someone who knows someone who has made a quick buck in real estate, these cases aren't common, and certainly can't be counted on. You should be prepared to commit the capital used in your investment property for years. If you don't think you can do without this capital for a long period of time, then you shouldn't make the investment. Investment property can be very profitable to those who have a large amount a capital they're willing to commit for a long time, and those who have a good sense of how neighborhoods are going to grow and develop. When considering investment property, keep the above tips in mind, and remember to start small.
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