6 Questions to Ask Yourself Before Investing in Real Estate for Your Business

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At a time when loan rates are low, a rental real estate investment has never been so tempting. So that you don’t start without knowing what to expect, here are six questions to ask yourself before investing in real estate for your business.

1. Why do I want to invest?

First, make your intentions as clear as possible. Want to create real estate assets? Contribute additional revenue to your business or reduce taxes? Then, calculate your means and make sure that you have a fairly stable financial base that will prevent you from taking unnecessary risks.
Once your goal is clear and you are confident that you can get started smoothly, it will be much easier for you to find the right type of property for your investment strategy and investor profile.

Related: The 4 Advantages of Owning a Rental Property as a Business

2. What types of financial flows come into play?

Be careful. Make sure you’re not just considering rent and monthly payments. There are other costs to plan for, such as management fees, rental insurance, if you use an agency, and condominium expenses, depending on the type of property. You may also have charges that differ depending on the country where the property you are investing is located. Also, consider taxes. Every monetary move must be squared upstream.
Always remember to have a construction envelope, especially for planning the entrances and exits of your tenants, but also for possible punctual repairs. Similarly, depending on your area of ​​investment, as well as your pre-chosen status, the rent generated by your property can add up to your overall income, and this can have a significant impact on your taxation. If your investment is not square, your profitability can be seriously affected. Keep all of these in mind.

3. Have I carefully studied the potential of the area in which I want to invest?

This is a very important point, which will largely determine the return on your investment and its useful life. Unfortunately, we tend not to substantially study the potential of the target area of ​​an investment. Many investors choose a city on the pretext that they know the area well, know where the attractive neighborhoods are, and where the right directions are.
Knowing the surroundings of a property requires knowing specific criteria of analysis, which are not acquired only by living in one place. So look at the number of vacant homes, the development of infrastructure and the extent of the job market. You also need to know the companies that are hiring and especially the supply / demand ratio.

4. How will I pay for this property?

Do you plan to borrow money from the property or buy it in cash? If your business has cash to reinvest, which you plan to fully invest in your real estate acquisition, using the bank leverage effect is part of the solution. You can use it to preserve the liquidity generated by your business and grow it into investments where bank leverage cannot be activated.

Related: 4 undeniable truths you should know before investing in real estate

5. Do I know the market price?

Those who want to invest in real estate are often mistaken for the price per square meter. This value fluctuates and the difference can be very significant. Then the decision to buy a property or to retract can be easily deceived.
To understand the potential of a property, it is important to know some key elements: the value of the property, the value of the land or the location of the property, the potential of the property and the long-term development of your property. zone.

6. Have I squared my investment to make it profitable for both buying and reselling?

As an entrepreneur, it is important to analyze the return on each investment as a whole. It is also important that your acquisition is profitable from the time of purchase. It is more than prudent to think about resale potential, even before making this acquisition.
You should have a reliable idea of ​​the benefits of the city in 10 years. In this sense, the following criteria are essential:

  • The development of tertiary areas

  • Access by transport

  • The migratory flow

  • The price of the real estate market

Keeping up to date with these developments will let you know if the city has already reached its full potential or if the value of your investment will gain value in the future.
Have you answered all these questions? If so, nothing will stop you. If you’re already thinking about renting an investment, with the idea of ​​multiplying your sources of income and growing your business, congratulations, because it’s a wise idea. With these six key points in mind, you can define an action plan to cross-reference your investment, invest in the best conditions, and ensure a bright future for your business.

Related: Learn to invest confidently in real estate

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