How to assess a real estate property for investment

The process of evaluating a real estate property for investment can seem daunting and demanding especially if you are aspiring to make a quick profit out of it.


Unlike personal purchases, investing in a real estate property is something that needs to be done based on specific calculations to guarantee a profitable investment and a never-ending source of income.

There are plenty of ways by which you can assess and evaluate a real estate property for investment where some are just a waste of time and money; while others are spot on.

Hence, we decided to give you here a comprehensive guide to the main factors should be considered when assessing a real estate property for investment.

Below are the 6 must-have factors in any real estate property to be considered a profitable real estate investment.

1- Location

When evaluating a potential real estate property, its location is the number one factor to asses. The location of a property, the neighbourhood, proximity to retail shops, transportation hubs, hospitals, and schools will make you take an educated decision.

The property’s location will tell you a lot about its safety levels, neighbours, amenities and services that surround the property.

If you are investing with the intention to let, then you need to invest in a location that is appealing to your prospective buyers whether they are families, expats or students.

When you find such location, invest in a heartbeat for this will make your property irresistible to potential buyers and tenants.

2- Value of the property

The value of the property has nothing to do with its selling price. A landlord could be asking for way too much than the property’s real value.

To know the real value of the property you are about to invest in, you should evaluate the vacancy rate of the neighbourhood, property maintenance costs, property taxes, insurance costs, the market’s capitalization rate and more.

All of the above will give you a hint on the real value of the property so as not to waste your money investing in an alligator property with negative cash flow.

3- Compare properties

To make an accurate assessment of a potential property, you will need to compare it with other properties in the same neighbourhood and area. The trick here when doing this comparison is to compare your property with exact same properties.

And by that we mean, same size, physical status, same floor and basically same everything to make an accurate decision.

By making this simple comparison, you will get a full picture of how other properties are doing in the market and whether they are attracting buyers or not. You will come to a conclusion on whether your potential investment is worth taking the risk or not.

4- State and condition of the property

Before you invest in a property, you must check it from top to bottom. Check for any required repairs and updates the property needs to improve its value and transfer it to a profitable investment.

Whether they are major repairs such as changes in the structure and possible cracks or minor repairs such as a fresh coat of paint; you should be investing much more money than you intended into all of these repairs.

And even though many might think that investing in a flipper-property isn’t a smart move; but savvy investors know that such properties are always sold for a price that is lower than the market price.

Experts advise here – even if you purchase it for a low price – to check your budget first and see if it will afford such repairs.

And now that you are well aware of the term “major and minor repairs”, it is up to you to decide what type of property to invest in.

5- The Future value of the property

Any real estate investor would want to make profits out of the real estate investment, hence, assessing the future value of the property is an important step here if you wish to have a non-stop source of cash.

To assess the future value of the property, you will have to take a close look at the current market status and its growth rate.

The future of the neighbourhood is one important factor, like any future developments such as schools, malls and hospitals that better serve the community. Such developments will make your property worth much more in 10 or 15 years than it is now.

6- Consult an expert

Professional real estate agents who have tons of expert in the field and well-aware of the market ups and downs will help you in making a better and informed decision.

These agents are familiar with the business and the market more than you will ever be and they will definitely assist you in making an objective decision away from any emotions or sentimentalities.

And even after the purchase, expert real estate agents can give you advice on how to increase the value of your property in order to fit with your prospect buyer standards.


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