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But many factors can affect your actual ROI.
This includes the property punch in, location, rental market conditions, your financing needs and overhead costs.
With so many things to consider, its not always easy to find theright investment opportunity.
Also, learn about thereasons a real estate investment might flop.
Location is key to successful real estate investing.
In my experience, properties in these areas have the potential to increase in value significantly over time.
This means good schools, amenities, infrastructure and plentiful employment prospects.
But if you plan to earn rental income, youll need an area with high demand.
Without tenant demand, your investment will be loss-making.
Ensure there is sufficient demand for the rental investment you are looking to buy.
So, how do you go about finding out the right price-to-income ratio?
If it is, you’re free to generally expect higher returns on lower prices.
This will make it easier to get your next investment project, and so on.
According to Simchi, this means choosing a property with high rental income and low overall operating expenses.
Research thelocal real estate marketto determine how much the typical home is valued at.
If the numbers add up, you could be looking at a great opportunity.
Properties with potential for renovation or redevelopment can offer significant upside potential, said Simchi.
Properties that can be renovated or redeveloped can increase in value by 10% to 20% or more.
This might be a remodeling, a loft conversion, an extension…
The increased value gives you the opportunity to refinance post works and extract your working capital to go again.
The Area Shows Long-Term Growth
Again, location is key.
The worst house [on] the best street: An old adage that still rings true!
This will maximize both your rental income and capital appreciation.
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