Investment Inquiry: What Makes a Great Property Investment?

private propertyWhen you’re putting your money on an asset for it to grow, you want to rake in profits from it without too much risk, effort, and time involved. This is the reason you have to be sharp in choosing the commercial property investment you spend money on. The optimal scenario is what you’re gunning for, and there are three things that tell you when you’ve spotted the right property.

The risk is relatively low

Real estate has its risks. Since the crash in 2008, many have doubted the industry completely. The industry has been steadily recovering from that slump, though. With investors being more careful with their choices, it’s now safer to decide on buying the right property.

The industry is on more solid ground now, which makes it safe for investment. Provided that you exercise due diligence, conduct a thorough analysis, and assess the situation first before you invest, you will find a low risk property.

The cash-on-cash return is fair

Buying property means shelling out some cash from your liquid assets such as bonds and stocks. You put this money into a highly illiquid asset, which is real estate. For this reason, you would want to achieve a fair cash-on-cash rate of return for the property you’re getting, say, around 4 to 6 percent.

You can accomplish this by getting properties with positive cash flow. These types of real estate net you decent profits, as compared to those negative prize properties.

The external factors are positive

Some say that commercial establishments take too much time and effort to make it work, but it all depends on external factors. Not everything in real estate has to be internal, as there are things outside our reach.

Visualise a commercial property amid a booming tourist town. With the location being discovered only recently, it’s certain that there’ll be a rush of visitors and developers. This is the example of a positive external factor, as you know there’s the certainty of returns.

Investment is a tricky game to play, but to the astute player, no game is too complicated to master. Observe the scenario carefully before you put money in. With the right knowledge, you can find a property that would rake in decent returns.