Every investor wants to be sure they’re getting their money’s worth and when it comes to real estate, the market you choose to invest in is a critical factor. Finding the best market involves different factors to be considered and this goes beyond just the type of property or where it is located.
To get a complete overview of the section of the real estate market you should put your money into, you have to conduct an analysis. In this article, we will be looking at what a real estate market analysis is and how you can conduct one.
What is a Real Estate Market Analysis?
A real estate market analysis helps you gather necessary information about a market to know if the conditions surrounding it are favourable or unfavourable to your investment. At the core of this is market research. Market research determines whether the transaction you’re about to carry would be profitable or run at a loss.
A real estate market analysis is also referred to as a comparative market analysis. And just as the name implies, you compare the different market values of the property you’re looking to invest in. This is an important step that should not be overlooked when buying or selling a property. When carried out properly, it will save you time, money and stress.
How to Conduct a Real Estate Market Analysis
When researching the market that will be best for your investment, you need to consider certain things and at the top of the list is your investment goals. Every successful investor whether in real estate or in any other business venture has goals they are aiming to achieve.
As a real estate investor, what kind of goals have you set for yourself and what kind of market do you think works for it? If your goals are short term and you need a quick return on your investment, you might want to invest in properties that enable you to do that. If on the other hand, your goals are long term investment, you would consider investing passively in the real estate sector.
Learn more about property investment here.
Steps to Finding the Best Real Estate Market
There are certain steps that give you the information you need to help you make your investment decision. Some of them are;
- The Location and Neighbourhood
What kind of location do you think would be beneficial to your kind of investment? Locations and neighbourhoods play a very important role in the outcome of an investment. While considering these key factors, you might want to look at the economic implications of residing in that neighbourhood; the population, the presence of security and basic amenities, proximity to major landmarks, level of commercial activity going on there and so on. These would determine if it’s a good place to invest in or not.
- The Property
You need to conduct a property analysis on the property you want to invest in. Depending on the purpose of your investment, either for commercial or residential purposes, you must find out if there is a demand for it before putting your money. Considering the current state and the location of the property, is it going to depreciate or appreciate in value as the years go by? This is what you must find out about.
- Pricing and Competition
You must compare the price at which the property is being offered or sold to the current price of similar properties in the market. Is it going to be a good deal for you as an investor? You must also consider competitors within the market and find out if this property would give you a competitive advantage.
- Legal Factors
The documentation and relevant legal processes required in investing in a property are very important. You have to find out if the property is legally recognized and approved for sale. Is the ownership being contested? Are the land title and other documents available? You might require the services of a real estate attorney to guide you through this process.
Check out Why You Need a Real Estate Lawyer.
A real estate market analysis helps you get relevant information to ensure profitable investment. This information would also help you when negotiating prices so you don’t get underpaid or end up overpaying for a property. MKH Investment is a real estate development company with properties that are strategically located in prime locations. You can contact us for more information by clicking here.