As in many aspects of life, the key to real estate investment can just be location.
There are a few things you can look for in the area of your possible real estate investment that can tell you some important things about the possible long-term health of your potential investment.
1. Check For Growth
Is the area you’re looking at experiencing strong population and job growth? Or is there a likelihood that such would happen soon? While the benefits of an increased local population are obvious, job growth that exceeds that population growth level can indicate a prospering community with money to spend. Areas that prosper are potential candidates for increased rent payments over time, one sure way to put you on the road to profitability with your real estate investment.
With job growth comes quality of life and as qualify of life improves in the location of your real estate investment, so too grows the level of rent you can charge. It is a tried and true fact that people will pay more to live in an area they enjoy, so the prospect of an area growing more and more attractive will directly influence the financial state of your potential real estate investment.
2. The Real Estate Market
What is the construction atmosphere of the area like? Areas that are seeing a boom in new home construction often experience those booms because of favorable job growth, income growth and other factors. However, for an area where building permits are outpacing new population, that could be an early indicator of an over supply of real estate that could lead to depressed prices for rent payments.
The best case scenario is an area where few homes are for sale, pumping up demand, and where new home construction is strong but not out of control. That can be a fine line, but because any investment takes a great amount of homework and research, it is something that should be investigated over the course of your decision-making process on a new real estate investment.
3. Closeness To A Congested City-Centre
The proximity of the property to an already congested city-centre or a town which is a bee-hive of commercial activities and fun-spot gives room for migration of people to the area or location in question. There will be a shift in population as new migrants begin to discover new grounds and possible locations where they can settle and still not miss out from the action or better-still be around the peak of the action where it all happens.
Invariably, as time goes your investment begins to appreciate at an alarming rate and prices of properties there may soon be at par with those in the city centre. Take for instance Lekki and environs which extends beyond Ajah. Imagine what the Ajah and environs would be in years to come.
4. The Land Crunch
Just as a low supply of homes on the market can produce an upwards trend for housing prices and, subsequently, the level of rent you can charge, so too can a low level of land available to build on. In an area where population is growing and jobs are strong, all of these new people have to go somewhere.
Whenever more people want to move into an area than there are homes for those people to live in, you will see an upward slope for home prices and viable rent payments. If there is little land left to build on, those buildings that are already built will be able to charge more for their rent payments, putting your real estate investment further towards profitability and the long-term benefit of owning property in an attractive part of town.
All of this initial information will not guarantee a profit on a rental property, but these are crucial steps to take when evaluating whether you want to put your hard-earned money into a real estate property that is sure to experience the ups and downs of the local economy. Especially for properties outside of your own home area, knowing the state of both the growth of the population and the home construction industry will help you more accurately predict the future viability of your real estate investment.
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