Characteristics of Good Investment Properties

Most people are intimidated by the prospect of acquiring investment properties. This fear often stems from the fact that potential investors are so preoccupied with what they perceive as the proper time to buy that they pass up opportunities along the way. Some people on the other hand are unsure as to how to choose the best property to invest in. Buying real estate specifically as an investment property guarantees several benefits that are superior to other investments like stocks.

Investment properties are a source of reliable and steadily increasing income. Rent and lease income can be a reliable and more convenient source of income for a wide variety of owners. Moreover, the value of the property itself appreciates through time. With the population increasing yearly, the demand for real estate properties will remain a constant even in the years to come.

The crucial point is choosing which of innumerable options would constitute a good investment property. The first characteristic of a good investment would be the intrinsic value of the property. Ideally, the investment property is bought at a price that is lower than the real intrinsic value so that upon purchase, a profit has already been made.

A buyer should ask himself how long he plans to keep the property. If the intention is long term, he will need to consider expenses relative to the investment property such as repairs, maintenance and taxes. Investors should choose properties that offer income greater than the expense needed for maintenance.

The next major consideration for any investment property is the risk factor. It would do no good to drain the investor of his assets by investing in a risky property. It is also healthy to consider having an exit strategy. This means studying all the possibilities, even those that can happen when things don’t go according to plan.

Finally, review the characteristics of the potential investment property. The location of the property is the primary characteristic that will determine its feasibility and profitability as an investment property. The focus should be on a steadily increasing income and a positive outcome. A common pitfall for some investors is the temptation to be greedy in having a speedy and unrealistic return. By concentrating on a more realistic expectation, buyers are less likely to be attracted to unreliable investment options.

Especially for long term plans, it would also be beneficial for the buyer to avoid the lure of trendy purchases. Just because the rest of the herd is snapping up a particular investment, it does not make that particular investment more reliable. A buyer should rely on rational study instead of emotional judgment in making such an important selection.

All in all, a good investment property is characterized by its suitability to the financial capability of the buyer as well as his investment time frame. It is also characterized by the present and future income to be generated, as well as its suitability to the future goals of the buyer.