6 questions to ask yourself before investing in real estate for your business

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At a time when loan rates are low, investing in rental properties has never been more tempting. To make sure you don’t start out without knowing what to expect, here are six questions to ask yourself before investing in real estate for your business.

1. Why do I want to invest?

First, make your intentions as clear as possible. Do you want to create real estate? Bringing extra income to your business or lowering taxes? Then estimate your resources and make sure you have a fairly stable financial base that prevents you from taking unnecessary risks.
Once your goal is crystal clear and you are confident that you can get started without any problems, it will be much easier for you to find the right type of property for your investment strategy and investor profile.

Related: The 4 Benefits of Owning a Rental Property as a Business

2. What types of financial flows play a role?

Be careful. Note that you do not only take the rent and the monthly amount into account. There are other costs to plan such as management fees, rental insurance, if you use a real estate agent, and condominium fees, depending on the type of property. You may also have costs that differ depending on the country where the property you are investing in is located. Also take taxes into account. Any money movement must be squared upstream.
Always remember to have a work envelope handy, especially to plan your tenants’ entry and exit, as well as any punctual repairs. Likewise, depending on your investment area and pre-selected status, the rent your property generates can integrate your total income, and that can have a significant impact on your taxation. If your investment is not squared, returns could be seriously affected. Keep all these elements in mind.

3. Have I studied the potential of the area I want to invest in?

This is a very important point, which will largely determine the return on your investment and its longevity. Unfortunately, we tend not to substantially study the potential of an investment’s intended area. Many investors choose a city on the pretext that they know the neighborhood well, know where the attractive neighborhoods are and where the good addresses are.
To know the environment of a property, you must be aware of specific criteria of analysis, which one does not acquire by just living in a place. So look at the number of vacant homes, the development of infrastructures and the size of the employment pool. You should also learn about the companies that are recruiting and especially the supply/demand ratio.

4. How do I pay for this property?

Do you intend to borrow or acquire the money for the property in cash? If your company has money to reinvest that you intended to invest entirely in your real estate purchase, using the bank’s leverage is part of the solution. You can use it to maintain the liquidity generated by your business and grow it in investments where the bank’s leverage cannot be activated.

Related: 4 undeniable truths you need to know before investing in real estate

5. Do I know the market price?

Those who want to invest in real estate often tend to make a mistake about the price per square meter. This value fluctuates and the difference can be very significant. The decision to buy or move in a property can then be easily misled.
In order to understand the potential of a property, it is important to learn some key elements: the value of the property, the value of the land or location of the property, the potential of the property and the development on long term of the Surface.

6. Have I determined my investment to be profitable for both purchase and resale?

As an businesstraverse.com, it is important to analyze the profitability of any investment as a whole. It is also important that your acquisition is profitable from the moment of purchase. It is more than wise to think about the resale potential even before making this acquisition.
Within 10 years you should have a reliable picture of the city’s advantages. In this sense, the following criteria are essential:

  • The development of tertiary areas

  • The access with transport

  • The Migration Flow

  • The price of the real estate market

By staying on top of these developments, you will know whether the city has already reached its full potential or whether the value of your investment will increase in the future.
Have you answered all these questions? If so, nothing can stop you. If you are already thinking about a rental investment, with the idea of ​​multiplying your income sources and growing your business, congratulations, because it is a wise idea. By considering these six fundamentals, you can create a plan of action to take your investment criss-cross, invest in the best conditions, and ensure a bright future for your business.

Related: Learn How To Invest In Real Estate With Confidence