Buying a real estate property should be taken seriously, with many factors deciding if your purchase is right. In this article, we will take a look at some of the factors and important things to know before buying a real estate property. Meanwhile, if you are looking for a real estate website that offers properties in Mexico, be sure to check out tulum real estate. Without further ado, let’s start:
- Location of the property
As the saying goes, location is king in real estate even today in 2021. After all, the location of a real estate property is a main factor in its profitability. The ideal location for real estate properties includes close proximity to commercial facilities, amenities, parks, iconic locations, scenery, as well as the status of the neighborhood where it is located. For commercial properties, access to marketplaces, transport facilities, highways, and tax exempt locations play a similar role when it comes to the value and profitability of the property.
Aside from the current status of a property’s location, you should also consider the future status in that area. After all, new amenities and facilities are constantly constructed, which means that a barren location today can be a bustling commercial space within the span of 5 to 10 years. You should take into account future plans in the area, or if it’s considered a zone to be developed. With this in mind, you should review the surrounding area around the real estate property you want to buy, and the whole neighborhood in general.
One method to do this is by visiting town halls or the government branch concerned with urban planning and assigning zones. By doing this, you can get a reliable overview of the long term plans within the area, allowing you to make an educated decision on whether to buy a location there or not.
- Property valuation
The valuation of the property will determine various things related to the financial aspects of the property, like the price you pay when buying the property, the listing price, cost of insurance, and tax computation.
Methods used when determining the valuation of a property.
There are three most common methods of calculating the valuation of a property. First, there is the sales comparison method, which compares the prices of other real estate properties with similar characteristics like location, proximity to amenities, etc. This method is most commonly used in old and new real estate properties located in a populated area with many other properties to be used as comparing points.
Another method is the cost approach, which uses the value of the land as well as the price of the construction of the building(s) in the property. After deducting the depreciation amount, we will get the cost approach value of a property. This method of computing the value of a property is suited for new constructions within an existing land or building.
Lastly, there is the income approach, which uses expected cash flow when computing the value of the property.