We examine 7 variables to give a rather complete study of an investment property; here are the important ones. In this article, we’ll read about 7 Important Property Evaluation Factors.
7 Important Property Evaluation Factors
1- IRR (Internal Rate of Return) (Internal Rate of Return)
It’s reasonable to be curious about your potential returns before even considering adding a property to your portfolio.
We recommend using the Internal Rate of Return (IRR) as a metric. The IRR calculation is often used in finance to determine the profitability of an investment; it considers cash flow and growth rate, making it more accurate than the traditional ROI calculation. Check out a free internal rate of return calculator.
2- Mortgage
Understand your mortgage options: will you be able to obtain bank loans, or will you have to pay the entire sum in cash? Based on the mortgage options available to you, weigh your potential rewards and risks.
Access to superior mortgage deals will always put you ahead of other property investors.
You should inquire about mortgage availability. Will it be made available someday? Is it available through the company structure? You can also compare mortgage rates and investment property loans
Read More about the complete IVF Guide
Once you’re satisfied with the potential rewards, the actual job begins. You must now determine whether the potential rewards are feasible. Following that, you must
3 – Research the City
Property investing appeals because it offers the best of both worlds: capital appreciation and rental income.
And a decent property can only provide both if it is located in an appropriate city.
“You need not fear the outcome of a hundred fights if you know the opponent and know yourself.” Sun Tzu’s
Investigate the city’s growth rate as well as its property supply and demand. This will offer you a better understanding of your property’s growth potential. For example, a city with a low property supply may see greater capital appreciation than a city with a high property supply.
This brings us to:
4 – Locate possibly high-yielding hotspots
Let’s face it: not every district is similarly designed. Rental yields differ between Boon Lay and Orchard.
It is your responsibility as a wise property investor to locate high yield hot locations in the city where you intend to purchase a property.
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This will offer you a better understanding of the yield-generating quality of the property you’re thinking about buying.
5 – Property compatibility
You should have an excellent property of the demand for your property now that you have a better understanding of the city and the district where it is located.
Some questions to consider are:
Is the property under consideration valuable to the people who live in its neighbourhood?
Is there enough demand for residential rental units?
Is it possible to walk to attractive amenities?
Will there be any new developments?
Following that, you’ll need to lay some groundwork.
6 – Street Inspection
Take a tour around the property to assess the level of security, convenience of amenities, and so on. This is best accomplished on foot.
You may not want to outsource this unless you have a reliable partner.
7 – Analyses comparable within a 500m radius
Finally, you must conduct some comparable or rival analysis. Check to see if there are any less expensive solutions in the neighbourhood. Ideally, you should not invest in the most expensive property in the region because it would put you at an immediate disadvantage in terms of ROI.
tl;dr
Choosing a decent investment property necessitates a meticulous procedure. Jeff revealed his 27-point check list during his live webinar, and I’ve highlighted 7 essential items from it above. You can learn directly from him by visiting this page.
