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How To Find A Profitable Investment Property?

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Do you intend to make investment in the real estate? It is preferable to know whether or not a property is profitable before investing. Continue reading to learn how to spot a good investment property.

Investment property

Source: Freepik

Are you planning to invest in property? Searching for a profitable investment property could prove to be daunting. The buying price of a property determines the profit you will make in the future and not the selling price.  

To invest in profitable investment property a person needs to follow the steps.  

Step 1: Gain the basic Information about a real estate market 

The first step in investing in property is choosing the right real estate market. Deciding the property market of which city to invest in will decide the return on investment.  

Economic indicators like population and economic growth will have a direct effect on the real estate market. While choosing the real estate market further we will consider which property will we invest in, residential, commercial, or a concoction.  

Step 2: How much you can afford?  

Before moving further to search for an investment property a person should set a budget. Real estate investing comes in all sizes shapes and opportunities- especially when it comes to the depth of your pocket(budget).  

Giving importance to the investment properties that fit your budget.  

Step 3: Going for Agent or Online Tools  

Either we can hire an agent or if we have time, we can research ourselves using various tools or sites.  

For hiring an agent, you need to do two things well:  

  • Build trust with local agents that you are a closer  
  • Set clear expectations about your buy-box.  

Step 4: Neighbourhood Analysis  

Now that a real estate market has been located and the budget has been decided, the next step for finding a profitable investment property is choosing the neighbourhood.  

For Example: For investing in property for a residential purpose a person will look for a peaceful neighbourhood.  

Gain the requisite knowledge about the city you are planning to invest in. Study the map of the neighbourhood and the listed properties.  

 If going for the agent ask, ‘What is happening in the market?’ They cannot indicate the following factors, but you need to understand by studying the data available on various city real estate board or council. 

  • Whether the market is buyer driven or seller driven 
  • Property’s average days on market  
  • The average list-to-sell price  

If you are a real estate specialist in the area, you will get the context behind these numbers and gauge what exactly is going on in the market. 

Investment property
Source: Freepik

Step 5: Find a property with best investment prospect 

Various Canadian property finder tools help you to find the best real estate market and neighbourhood to invest in. 

Leverage the Property Finder Tools to search properties based on property type, price range, number of bedrooms/bathrooms, and rental prospect, etc.  

Step 6: Analyse the investment property 

You need to analyze the property to ensure a high return on investment before putting down your money.  

Leverage verified data analysis tools and historical data to calculate the cap rate and cash on cash return. You can predict the future prospect looking at the growth prospect in the neighbourhood.  

For example, City X comprises the locality where the future offices will be set up. This ensures that your investment will turn into a profitable one in the future as the demand for the property will increase due to the influx of new offices in the area.  

Step 7: Perform market analysis:  

Perform comparative market analysis the aim of doing so is to evaluate the price of the real estate property based on the area of investment.  

Comparative analysis will help you to check the listing price of the investment property. You need to figure out if your property is comparable to other properties within the target area of growth.  

Thus, those who want to invest in a profitable property should follow the steps mentioned above.  

The above-mentioned steps are the basic criteria to be followed while investing in the property and are used to find a profitable investment property.  

You might be thinking about whether you need a real estate agent or what rent should you charge for your investment property. To clear these questions, you can read our articles below.  

References:  
https://erinmagazine.com/9-steps-to-find-a-best-profitable-investment-property/
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