Seven Pro Tips For Finding The Best Markets To Invest In Real Estate

As a newbie or an accomplished investor, finding the perfect market where one can invest for long term profit is an important but difficult decision. The real estate market can vary from place to place and can change because of factors such as GDP, economy and even unemployment, etc. For those who are thinking of venturing into the world of real estate as investors, it is imperative that they are aware of some of the common trade tips that all the professionals use. If you are new to the market, then keep on reading as we have listed seven tips that are going to come in handy in real estate investment.

1. Consider RTV of 1%

The quickest and most convenient way of determining whether a property is a smart investment or not are is by determining its RTV ratio. RTV is an abbreviation of the term Rent-to-Value. This is the income generated from the rental to the price of the property e.g. a building worth $100,000 given out on rent for $1000 a month then the RTV calculated will be 1%. A property with RTV ratio of 1% a month is considered a viable investment option. If the value of RTV falls below 0.9% then you might not be getting the cash return that you desire. So, if you want to maximize your cash flow accounts, then you must consider a 1% RTV figure.

2. Note the Rent Demand

Large cities have a huge number of people who need to rent flats or apartments but in small towns and counties, you can also find many people looking for rental houses. A percentage of people, who rent a house, is between a handsome figure of 40% to 50%. This percentage is good for a buy and hold strategy. An area with the renter population that falls below 30% will not yield good results. Ideally, investors should look for markets where the renter population is between 30% to 60%. A market with a percentage of 60 and above is also not a good sign as the market does not catch the attention of owner-occupied buyers. Also, the size of the population does not always have to be large in order to have a good renter percentage.

3. Diversity in Economy

While evaluating a property is a good investment strategy, it is also important to assess the market you have decided to invest in with the following questions:

1. Is it open to trends and changes?

2. Who are the main players?

3. Are the area and market related to the business you are investing in?

All these questions are crucial as you need to confirm whether the market will be beneficial for a long term investment or not. A diverse economy in this regard is the key as it will support stability for a longer period and also young professionals will have the opportunity to grow. Market depending on one industry can easily be demolished in time of recession or instability. Therefore, seek areas with a diverse economy to stay on the safer side.

4. Broaden your Limits

Many investors have this concept of investing in their zone. This concept is however outdated nowadays because of advanced technology and the rise of internet-based facilities. In order to search for a market that makes your investment fruitful, look outside the comfort zone of local market. You can live where you desire but when it comes to investing, invest where it is profitable. You can easily miss out on some of the best markets to invest in just by not exploring.

5. On-location Team

If you are looking to invest in a market that is not geographically close to your location, then hiring a team of professionals to work in the area you are investing is a must. While you are choosing the team, you must consider the key factors that make your team strong i.e. willingness to join in, professional dedication and sense of loyalty. While real estate is all about customer service and sales, you should build a team of individuals who have the quality to convince and retain customers on behalf of the company. For example, if you are working for real estate Makati .based company then your team must have access to your investment and client list for scheduling guided viewing.

6. Eye of an Investor

It is quite common for an investor to decide based on the locations they would prefer to live in. One place that you prefer to live in might not be your client’s cup of tea. It is advised that you do not make a decision on the quality of the market based on your personal preferences. If you are getting the numbers from a property that you desired for, then do not make a big deal out of it i.e. if you do not like something related to the property but it pays well, then thinks before rejecting it straight away because property can always be altered. Look into the untapped markets from the renter’s point of view.

7. Explore Market

Stable markets are a great option for real estate investors. The main reason for this is that markets that have instability and drastic changes in trends are hit hard during the time of recession. A business that shuts down, leaves the entire area affected whether it is the property investors or the general population. Because of this, the demand for rented houses goes down and the rent prices drop significantly which in turn harms the cash flow for the investors. Stable markets have more possibility of surviving the damage without impacting the real estate business. This is one of the most important points to consider while making a decision While you continue your journey to find the best market in town, it is always a good option to consider these seven points. Investing in the correct market is important to get the return on the property you wish to rent out!