There’s a lot you could do to turn a bad investment around and make a profit in the end, but most of the time, finding the right investment property from the get-go will be crucial for ensuring a positive long-term ROI. No matter if it’s your first investment or not, or if you’re looking into the residential or commercial real estate sector, finding the right property right off the bat will help you save money in the development process, market the property to the right customer base, and attract affluent buyers or renters to line up and make an offer before the development is done.
To achieve this, you first need to identify the key traits and external factors that make a property truly worth investing in. Let’s take a look at the six key elements of profitable investment properties.
The neighborhood
You can’t hope to attract residential or commercial buyers and renters to a shady neighborhood with poor infrastructure located somewhere outside of town. Sure, property development in remote areas has boomed over the years, but mostly in the areas where tourism is popular and where there is still a decent infrastructure to make life comfortable. With that in mind, you need to be very careful when choosing a neighborhood for your investment.
Modern tenants and buyers will be looking for properties that ensure comfort and ease of living, which means that the property needs to be situated in a neighborhood that has all of the essential amenities. Make sure that the property is located near a grocery store, public transport, schools, hospitals, and more.
The curb appeal
People won’t want to buy or rent a property that doesn’t boast a decent curb appeal. Aesthetics matter, simply put, and buyers will emphasize the property’s look and feel as they approach it, paying special attention to how it looks from the curb, the driveway, and the front lawn. Luckily, the curb appeal is something you can spruce up before putting the property up for viewing.
Keep in mind, though, that this will be yet another expense that you will have to factor into your property development budget and funding plan, so make sure to allocate adequate resources before investing. It’s important that you mend the pavement around the property, the driveway and the walkway leading to the front door, and tend to some meticulous landscaping to complement the building’s design.
Capitalize on cost-effective building materials
In order to ensure a long-term ROI on your investment property, you have to use cost-effective building materials and the best construction practices available. This is especially relevant in the commercial sector where you’ll be leasing commercial spaces to companies and business leaders around the world for years to come – your goal should be for your property to generate income with minimal extraneous costs.
For example, one of the most sustainable building materials is steel, as it’s durable and affordable, however, steel installation should be executed by professionals and experts with a proven track record and a set of certifications that will guarantee you get the best steel on the market along with top-quality installation. This will ensure that your new commercial property is durable and that it will generate a positive ROI in the years to come.
Modern features for passive savings
Speaking of sustainable properties, if you are to capitalize on these trends and the eco-conscious generation, it’s important that you optimize the property for financial savings. Whether it’s a commercial or residential property, you need to introduce passive conservation features such as wall and window insulation to help tenants save money on electricity while reducing their carbon footprint.
It’s also important to introduce smart appliances, allow easy IoT and smart integration, and provide your tenants with a way to generate clean energy and cut waste. Combined, all of these features will help build a modern home for the modern home buyer or modern office space for a forward-looking business leader. What’s more, passive conservation combined with smart solutions and tech will help elevate the functionality and comfort of the property, thus elevating its value.
Economic factors and consumer trends
It should go without saying that you shouldn’t invest in a property just because the local real estate prices are low. A market might seem like it’s ripe for the picking right now, but an experienced investor will always focus on the trends and socio-economic factors that will shape the market in five, ten, or fifteen years. This is why business leaders explore foreign markets as well, such as Indonesia, which is currently undergoing rapid development across the map.
In Indonesia, for example, real estate companies have been capitalizing on emerging trends, making great success in the fields of sustainability by investing in eco-friendly property development, local charities, and more. It’s important that you look into foreign markets like this one to discover lucrative opportunities in niche markets, and capitalize on the trends that guide the consumer market, and shape the local culture.
Flexible and customizable floor plan
And finally, remember that the interior design of the property can make all the difference, especially if you’re trying to appeal to a younger generation of homeowners or business leaders. Nowadays, tenants are looking for a floor plan that allows them to customize their living and work environments as much as possible, which is why you should invest in an open floor plan. This sense of capaciousness will allow the tenants to play around with the space and mold it to their current as well as long-term needs. If your property can grow and evolve with their goals and aspirations, then it will immediately gain more perceived value.
A property isn’t profitable just because you got it for cheap, as there are numerous key factors that will influence your long-term ROI. Keep these tips in mind when looking for your next investment, and be sure to keep an eye out for the latest trends to guide you towards the most lucrative opportunity.
