What Makes a Property a Good Investment? 8 Questions Every Investor Should Ask
A property can be beautiful and still be a poor investment.
It can be expensive and still be overpriced.
It can be located in a popular neighbourhood and still have limited demand.
So what actually makes a property worth considering?
Here are eight questions every investor should ask.
1. Is There Genuine Demand?
Who is likely to want this property?
If you cannot clearly identify the future buyer or tenant, that’s worth examining.
2. Is the Location Strategically Positioned?
Look beyond today’s popularity.
Consider accessibility, infrastructure, surrounding development and future demand.
3. Is the Price Reasonable?
Don’t evaluate a property in isolation.
Compare it with similar properties and consider what you’re actually receiving for the price.
4. What Is the Quality?
Construction quality, finishing, layout, facilities and maintenance can influence both demand and resale prospects.
5. Is the Documentation in Order?
This is non-negotiable.
Ownership and property documentation should be appropriately reviewed as part of due diligence.
6. What Are the Holding Costs?
Service charges, maintenance, taxes, facility management and other costs can affect the economics of an investment.
7. What Is My Investment Timeframe?
Are you looking for a short-term opportunity?
A five-year hold?
A ten-year asset?
Your timeframe matters.
8. Does the Investment Fit My Overall Financial Plan?
A property can be good and still be wrong for you.
The right investment depends on your financial position, objectives, risk tolerance and timeframe.
The Lesson?
Don’t ask only:
“Will this property appreciate?”
Ask:
“What makes this property valuable, who will want it in the future, and does it make sense for my objectives?”
That’s the type of thinking we encourage at Alexel Luxe Realty.
Because real estate investment should be approached with strategy, not simply excitement.
