The return on investment is based on a calculation on the amount of money invested in buying a property or asset and the profit made by that very investment. There is a calculation where the return made is divided by the cost incurred. The result comes in percentage or you may get a ratio too. If you know the outcome of your investment, you will realize the utility or futility of your efforts and your future investments will be alerted based on today’s calculation. Now, you are wise about investing and know the efficiency of your investment.
- You should know what the current value is of your investment
It is the amount you would get if you sold the asset and the proceeds will be your value of this asset. The idea of your return in terms of percentage will allow you to make a comparison with the other pieces of investments you’ve made or are going to make. ROI has gained popularity over the years because it is found to be indispensable in the business arena. Based on the return on investment in anything, whether monetary or otherwise, strategies are made, decisions are taken and options are exercised before investing. It is common knowledge that one should look for positivity in return. The moment you notice that the ROI is going to be negative, you will immediately chuck it. it will turn into a loss-making proposition if you insist on the same investment option. If you’re investing in property for buy to let purposes – buying a home and making returns by renting it out to tenants – you’re also going to want to make sure that you’re aware of the rental yield averages and percentages in the area. RWinvest state in their guide to property investment that rental yield is hugely important, and should be a crucial factor in making a decision on the area/property type you want to invest in – alongside other factors such as tenant demand and potential for capital growth
- You should think many times before you decide on investing in property
There was a time in the recent past when the losses were reigning supreme in the housing sector. There was a crash in the housing sector and the property prices were getting stagnant or moving at a snail’s pace. It was not a good thing going for the owners of the property or the builders. They were waiting for the sunshine which was ominously hidden behind the clouds. Fortunately for everyone, the financial market has gone steady despite the presence of all the elements of a crash. It has sustained the period of crisis with guts. Now, you can look forward to making your investment portfolio in the property business. You are willing now to invest in the houses and properties.
- Proper financing is a must
A single most important point that may prove a bit challenging while making the right decision in doing this business of housing or buying a house for that matter. You need to go for the financing but you will need some assistance in this way. You need to be innovative and a bit of a strategist, to be making some inroads into the area of ownership of property. You need to take recourse to some tips that might come your way. To begin with, you should make as large a down payment as possible. This way, as a borrower, your position and status will be stronger than an average borrower. If the amount of your down payment is large enough, your interest rates will be much smaller than otherwise. A big down payment also wins the trust and confidence of the bank that is financing you. The bank will not be in a soup, in case you turn out a defaulter and the bank begin biting its nails.
- Know more about the property
You should read the writings on the walls while rushing to choose the property type, location, etc. and also the borrower. Have some patience, give yourself sufficient time, listen to the grapevine, get in touch with the people in the neighbourhood who may turn out to be your neighbours. It’s very important that you read between the lines of the loan documents and the policies of the banks or the lenders. There are many finer points that you may overlook out of sheer smugness or gullibility. You can be on either side of the spectrum. Make a comparison between various lenders in the market.
- Get help from key people
It’s a good idea if you engage a local agent who knows the property and property business better than you. You should visit the banker nearby whom you may know by name or by face also. These small details do help oftentimes. He may help you cut away on the expenses that can be avoided and your loan terms could be more tenable. You may have in him a more flexible person in terms of financing and other relevant things. You should be doing a background check of the agent you’re going to hire. It’s a little pain but of high value. You should remember that an investment in a home is going to be a long-term proposition and asset. It cannot be reversed or liquidated so easily, even if you want to. It’s a good idea to have face to face interactions with people you know for long like your network or friends. They will not advise you wrongly. You may invest in real estate as a kind of retirement investment proposition as a source of income for you during your retirement.
Property investment is the most important decision of yours and you should do it after due consideration of factors like property prices, market condition, availability of loan, terms & conditions of the loan, quality and location of the property. There are also a host of other considerations that you should put under your scanner.