Location is key to look for in real estate. However, many other reasons could help in coming up with a decision if an investment is apt for you. If you are looking for property investing Melbourne, you could find a lot of agencies online that offer such services. Property investing or real estate investing is a sensitive process where input from experts could help you a lot. Look at some of the most important things you could consider if you are planning to invest in real estate. 

Location of the Property

An important aspect when you are considering the location of the property is the long term view regarding how the area would evolve over the investment period. For instance, if an open land today behind a residential building might sometimes turn out into a noisy industrial area which may bring down property value. You should review the ownership properly before you plan to invest in the area. One method to do so is by collecting information about the area by reaching out to the local governing authority who is in charge of urban planning or zoning. This would provide access to proper planning and in deciding on how favourable or unfavourable it would be to think of buying for the property. 

Valuation of the Property

The most commonly used real estate valuation methods are:

Sales comparison approach: It is the method of comparing sales of properties with similar characteristics. It could be most suitable or common for both new and old properties. 

Cost approach: Here, the cost of the construction and land (reducing the depreciation) is analysed to check if it is suitable for new construction. 

Income approach: it is based on the expected cash flows and checks if the property is fit for renting out.  

Investment Horizon & Investment Purpose

Identify if the following broad categories suit your purpose and plan accordingly. 

Buy & Self-use: This could help in potentially saving the rent and having the benefit of self-utilization when you get the value appreciation.

Buy & Lease: This could offer regular income and long-term value appreciation. However, you should be a landlord to handle possible disputes, legal issues, manage tenants and so on.  

Buy & Sell for Short Term: This could be for quick, small to medium profit where the typical property would be under construction and would be sold at a profit on completion. 

Buy & Sell for Long Term: It mainly focuses on large appreciation with intrinsic value over a long period. This offers various alternatives to complement long term goals like retirement. 

Profit Opportunities & Expected Cash Flows

You can expect cash flows from rental income, benefits of depreciation, expected increase in intrinsic value due to long-term price appreciation, cost-benefit analysis of mortgaged loans vs. value appreciation and cost-benefit analysis of renovation before sale to get a better price. 

Be Cautious with Leverage

Based on expected and current earnings, you could 

Decide on the mortgage type that would suit your situation – adjustable rate or a fixed-rate mortgage, interest-only, zero down payment etc. Each type of mortgage has a risk profile of its own and it should be studied properly.