Real estate is and has always been about location. Location is possibly the most significant determining factor in the demand for housing, availability, and affordability.
A more favorable location will almost always incur higher prices compared to similar homes in not-so-desirable locations. Location is also the number one factor that distinguishes a good real estate investment from a bad one.
For instance, simply because a property is expensive and in a high-priced area doesn’t automatically mean it will be a worthy investment.
In fact, real estate is so location-dependent that it can turn one neighborhood into a prime investment opportunity whereas others can become places to stay away from. Choosing the wrong location can have a more adverse impact on the outcome of your investment than the amount you’re investing.
Picking the Right Market
When making a real estate investment, the first step is finding the right general market, which ideally, should be the one that is prime for future growth. Focus your search on those areas that are projected to increase in population and employment opportunities in the future.
This increase will prompt a continued demand for rental housing. Your benefit is that this will ensure you have a large pool of potential tenants, which also means that both your rental income and property value will increase.
When you’re purchasing a property to rent, make sure it increases in value over time. Consider the costs of not just buying the property, but also costs for property taxes, insurance, renovation, and maintenance. The final preliminary assessment that needs to be made is whether a region supports rental rates that would result in positive cash flow.
For example, consider seaside investments in an area such as Montenegro. There’s a market for both small-time investors and massive projects, with the full support of the government, particularly in the area of the Bay of Kotor, but in wider Montenegro generally as well. The idea is to turn it into the main Adriatic destination for the super-rich, so it’s a very promising market.
Whereas Croatia got into the game quite early and is targeting mostly middle-class Europeans, Montenegro has a bigger vision by keeping prime land for various developments.
If this seems like an attractive project, take a look at the Montenegro realties catalog that offers a wide selection of properties for sale ranging from off-plan developments, gorgeous villas, apartments, fixer-uppers, luxury waterfront properties, and land for sale.
Picking the Right Neighbourhood
Once you’ve chosen the right market, narrow down your search to the right neighborhood. Bear in mind that the wrong property in the right market can be as detrimental as the wrong market altogether.
With that in mind, look for a neighborhood that has solid income levels because a higher income typically means homes with higher price tags, a good school district for potential families, amenities such as shops, restaurants, parks, medical facilities, and similar, and transportation options as people generally move to areas that are closer to their workplaces. Access to reliable public transportation can greatly contribute to the good ranking of a neighborhood.
Picking the Right Property
Once you’ve selected the right market and the most favorable neighborhood for your investment, it’s time to take the final step and that is choosing the right property.
The aim is to find a such property that fits within your budget and that will provide you with the best return on investment when compared to the anticipated rent you’ll get eventually.
Additional steps you need to take is to bring an appraiser who will evaluate the property and compare it to other recently sold homes in the same market.
Then, the inspection will provide information if there are any potential major issues to address such as the property structure, its foundation, electrical work, plumbing, roof, windows, heating/cooling systems, and even pest control.
If you’re planning to finance your investment through a mortgage, make sure you do all the calculations and figure out how much upfront money it will cost to acquire the property and then have it ready for listing and renting. You should factor in costs such as monthly mortgage payments, insurance, and maintenance.
Location plays an essential role in property investment. It greatly affects the quality of life because a property can have a great structure, high-quality works, and all the desirable amenities, but if it is not in the right location, it will not be an ideal option. Investment in real estate is not something that is done lightly or frequently, so all factors must be considered, among which location is the primary.