Place a bet on a hot residential community for quick gains or invest in land due to mature in a few years? If you happen to be a real estate player, the question of parking your wealth for a long or shorter period have certainly weighed in on your decision making process at some point.
Though the basic rule of high risk-high reward may work for many, it is always wiser to consider a few key factors while making each type of real estate investment. With some help from friends at Zameen.com, we lay the facts straight for you.
Short Term Investment
If you are contemplating short term real estate investment, there are some factors that you should ponder over before investing your capital in a property that you think will double your fortune in the short run.
Ask an old school real estate player or talk to a new player in the business and both of them will tell you that location carries a lot of weightage when it comes to buying and selling a piece of land. Location of a property is an important aspect that leads to good profits in terms of real estate investment.
While making a short term investment, it is necessary that you pay heed to the location and judge if the area you are investing in has the potential to earn a commercial or residential income. If you are investing in a commercial plot then the right decision would be to develop the plot per requirements of a commercial zone. For instance, constructing a shop and two will ensure healthy profits for you if you manage to sell them off at a good rate. Such commercially developed areas can also be used for renting purposes which will rarely leave your pockets empty at month’s end.
On the other hand, investment in a residential area can also prove lucrative in the short run if the area surrounding your investment is witnessing fast development activities. The investment will gain even more value if a large number of people have already started developing their plots there. This means that the area will become lucrative in a short period of time and will also boast of basic necessities of life such as electricity, water and gas connections (which follow populations wherever they go). Proximity to such facilities is always beneficial for a property since its asking rate will automatically climb up over a short time period.
Moreover, a short term investment will also ensure good profits if the area under consideration is closer to additional facilities such as a park, a hospital, schools and transportation facilities. This will not only link your property to different areas of a particular city through transport channels, but will also provide easy access to a hospital in case of an emergency and a park in case you feel like losing those extra pounds of winter fat.
Long Term Investment
In case you are thinking about making a long term real estate investment, you should take into account certain features which will ensure that your hard-earned money does not go down the drain.
Obviously, an astute investor seeking a long term property investment will opt for an area that is not yet developed but carries excellent prospects for future development. In this case, the most important thing to look out for is accessibility. For instance, if a particular area has been selected for the development of a residential or commercial zone, the worth of the area will be directly linked to whether that area has access to the city centre, modern transport facilities and markets where one can purchase everyday utility items. An area that has proper access and links to the main arteries of a particular city will be developed at a faster rate than an area that lacks proper access.
Another factor to look out for is the future trend of development in the area – whether that area will be developed into a housing society for the elite or middle class sections of society or whether it will be used for commercial purposes. In both cases, you can add to the worth of your property by utilizing your land either for residential or commercial purposes. Profits are guaranteed either way if you manage to strike a good deal.
Long term investments also require a person to carry out some research on the trends of population shift from one area of a city to another. The usual population shift in metropolitan areas takes place from the city centre to the outskirts where there is more land and more opportunities to develop the areas per modern standards. One reason behind this shift is that with time properties located in the centre of a city become expensive while residential areas are also usually converted into commercial zones where most business activities of the city take place.
It is very important for a long term real estate investor to have enough information about different areas of a particular city to be able to predict the trends of population shift within that city over an extended time period. This will help you make clear-headed decisions while investing long term in a property that you hope to see as a profitable asset in the long run.
Keep these suggestions in mind and you will rarely go wrong in identifying a profitable property around you. Good luck!