Top ten signs that signal a Smart real estate investment

Whether a speculative investment tool or a sound financial decision, in some ways, the real estate market presents a more predictable vehicle for those wishing to multiply net worth and assets. Unlike, for instance, the shares and stocks market, market movements tend to be relatively more gradual and subject to easily identifiable factors. However, the flip side is that a real estate investment is considerably more difficult to unload, especially if it should gain a reputation as a dud investment. Investors who have taken a less than ideal option can be left bearing ongoing costs and an accumulating loss of value, for considerably longer than is the case with many other investment vehicles. Putting it simply, making the right choices, and identifying both the ‘red’ and the ‘green’ flags is crucial when investing in real estate.

 Gemini Property Developers CEO Sunil Gomes believes that every investment budget presents buyers with options as long as their expectations are realistic. In his opinion, we live in a particularly opportunity-rich era when it comes to investing in property. With rapid urbanisation as well as renewal initiatives being undertaken in literally every regional market, he believes the crux of the matter is identifying the right opportunity. Sunil cites his experience across multiple property markets as being the reason for his belief that accurate and honest assessment is the crucial differentiator in real estate. In his opinion, the central challenge is for investors to reconcile their current and projected financial profile, desired outcome and the specific parameters of the property itself. Subject to an accurate and rational assessment, Sunil believes that any investment can become a smart investment.

The top ten signs that signal a smart real estate investment:

Several factors justify interest in a potential property investment. Traditional wisdom cites the often repeated catchphrase of “Location, Location, Location” as the overarching reasoning to base decision making on. While this is an effective way to summarise the approach, Sunil believes that specific details associated with a location and property need to be unpacked to make an informed investment decision, and these can be influenced by region, neighbourhood. In his opinion, some of the important indicators that a real estate property is a viable opportunity for meeting the goals of an investor are: 

  1. Good Mean property value and neighbourhood profile. Established value is always a good indicator of the scale and rate of returns in any investment. Real estate is especially prone to sentiment. The average price attracted by properties in an area, as well as the perceived demand, are an obvious parameter to consider.
  2. Current & expected Infrastructure and amenities. Whether a property is residential or commercial, the quality of infrastructure that serves the location is an important factor to consider. Not only does this influence current value, but it is also a reliable metric of probable returns over a given period.
  3. Attractive Rental returns. Investment in real estate is not solely driven by a desire for occupant ownership. When chosen for the sake of likely gains, rental returns become a crucial factor. The viability of an investment of this nature is substantially dependent on the ongoing returns it can generate.
  4. Walkability index! Accessibility and transport are key considerations no matter how desirable the construction, fittings and amenities that a property offers. “Walkability”, meaning a combination of factors like metro/transit access, bus stops, retail/shopping and parks adds to the long-term appeal of a property
  5. Trends in the pricing of retail properties. One of the ways in which an emerging opportunity in either residential or commercial properties can be identified is the movement in the value of retail properties in a region. Moving in early into an area that could soon become ’hot’ is an astute investment move
  6. Growing numbers of schools, hospitals and recreational areas. A rise in the number of educational and healthcare institutions, as well as recreational facilities, is a sign those locations will become robust neighbourhoods in the future, attracting people & investment, driving a rise in value.
  7. Access to employment opportunities. Locations in proximity to commercial office spaces, businesses and other avenues of employment escalate in value relatively quicker than suburban areas.
  8. Aqua Vitae! The charm of water continues unabated since time immemorial. Closeness to a water body is a definite plus.
  9. Commercial projects underway & future development initiatives. Lots of in-progress commercial projects signal an area that will prove to be a smart investment. Additionally, areas where proposed administrative or governmental initiatives/legislation will create real estate requirements, are a good buy.
  10. Taxation and tariff profiles. The viability of a location as an investment opportunity can be significantly impacted by the levies and tariffs it attracts. Municipal overheads can sometimes be a hidden cost that investors miss. A property with substantially higher rental returns, for instance, might not be as lucrative as another, due to such additional costs.

Smart real estate investing requires a balance of attitude and knowledge

The advantages of real estate as an investment vehicle are numerous. From addressing real-world needs while it is owned, to the possibility of ongoing returns and strategic financial options such as tax offsets, the property market presents unique opportunities. While the above tips do create a sound case for smart real estate investing, this particular asset class demands a lot more – an investing mindset driven by a vision, planning, and a lot of patience. Happy investing!

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