Doing your homework before you buy can ensure you have the right property for your Orlando real estate investments portfolio!
While it isn’t entirely the case, the real estate market can be at least a somewhat predictable investment. Knowing how your investment will – or won’t – perform for you can be based in part on certain economic trends as well as on local factors. However, if you know what to look for prior to purchasing a property, it can also be easier to predict whether or not a certain time is even right to buy.
This is because first, the changing economic variables can – and oftentimes do – have an effect on the price of housing. As an example, an increase in gross national product, or GDP, can be a driving factor. It has been shown that even just a 1% increase in GDP can be linked to a rise in real housing prices of between 1 and 4% after roughly three years.
Interest rates can be another key criteria. Here, a decrease of approximately 1% in rates over the short
term can be associated with between a 1/2 to a 1 1/2% rise in the price of housing within just one year.
Even what’s happening in the stock market can have an impact on the price of real estate. Studies have shown that over a three year period of time, a 10% rise in the price of equities can equate to a roughly 1% increase in housing.
In addition to these broad based factors, there are also items that you can check on a more local level that can help you to predict how your investment may perform as well. For instance, here, you can look around and get a feel for what areas seem to be in a decline as versus which ones seem to be rising.
Some clues that you should shy away from a deal can include whether or not there are a large number of homes for sale in a certain area – or worse yet, in foreclosure, as well as a high number of For Lease signs showing up on the surrounding businesses.
On the other hand, does there appear to be a lot of new construction – especially if it is both residential and commercial – that is being quickly purchased and filled with owners and tenants? Likewise, are the local schools filled to capacity – or better yet, do they have a waiting list for students hoping to get in?
Many investors will take a walk through the neighborhood that they are considering purchasing in. This can be an ideal way to get a feel for what it would be like as a tenant living there. While you are walking, try and notice what the neighbors are doing. Are they tending to their yards and houses? Are there children outside playing? Or are there cars speeding through the street and groups of not-so-friendly looking people hanging out in the yards?
Doing your homework prior to purchasing can really help you to ensure that you are going in the right direction with the property that you are considering – even if it means passing on a particular deal and waiting for a better opportunity to come up.
Once you’ve secured the right property, you then need to locate and secure the right tenants. That’s where we can help. We offer Orlando property management services that can help you to capitalize on your Orlando real estate investments so that you can take full advantage of the benefits.