Posts Tagged ‘profitability of a real estate investment’

Factors That Determine The Profitability Of A Real Estate Investment

Thursday, February 26th, 2015

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Real estate investors have a lot to think about when they are looking for an investment property. There are many factors to consider when searching for the most ideal property including, the location, the price, and the most desirable niche in a particular area. Those investors who have a handle on all of these factors should be able to make an informed decision regarding the profitability of a real estate investment.

The first factor that investors must consider when determining the profitability of a real estate investment is the location. We have all heard the common phrase, location is everything and while this is true, the future location is more important than the present location.Investors who take the time to speculate on the future economic conditions of an area can determine whether it is bound to be profitable throughout the investment period. In fact, the investors who stand to earn the greatest profits do so by taking this factor into great consideration.

Another factor to consider when determining the profitability of a real estate investment is the price of such a property. Many investors believe that purchasing a foreclosure is generally a good investment decision. While foreclosure properties have the potential to offer an investor the best price, they generally aren’t priced that far under the going property value in the region.Those who purchase foreclosure properties can expect to pay 5% to 7% off the current market value. This discount is generally not sufficient enough to warrant the risk level that investors assume when they purchase foreclosed properties.

When looking to secure the best price, investors should do what they can to work with desperate sellers. Those who are able to find these individuals and deal with them will almost always be able to earn a profit on their exit strategy.  With that said, investors earn a profit when they purchase a property, not when they sell it. This is true, as the initial purchase price affects the profitability of the entire investment.

Another factor that affects the profitability of a real estate investment is the niche that one chooses. Those who have a good understanding of a localized region and can pick the most profitable niche should be able to generate a return on their investment.Investors who purchase rental property in a region that has a large number of tenants understand the value the rental property niche represents in this area.

Investors who consider a large number of factors before purchasing an investment should be able to determine the profitability of a real estate investment.

Asking questions with these tips in mind will help save real estate investors thousands.  For more ideas related to real estate investing, call or visit us a Homevestorsfranchise.com.  We are the nation’s number one home buying franchise with over 15 years of experience.  Our company has a vast assortment of real estate investment and real estate franchise opportunities available to help you grow your real estate business.  Come see us for more information.