Things to Consider When Investing in Real Estate

If you want to become a good real estate investor, you should start by asking yourself the right questions before investing. What is my expectation regarding this investment? Am I making this investment for myself or for my children? Every investment you make without asking such questions should be considered in the category of investments based on coincidences.

Let's exemplify the event by reducing it to a greater simplicity. If your investment is your expectation, getting a place to stick your head, things to think about are very simple. Your job, the school of your children, perhaps the distance to those who take care of the children (grandmother, caregiver, nest, etc.), your expectations regarding the neighborhood where you want to sit, the size and age of the house and, of course, life your style. Usually the problem we all face is that the houses of the standards we want in the region we intend to buy do not fit our budget.

At this point, listing the items we care about, from the most important to the most important, and identifying what we can sacrifice will make it easier for us. If the size of the house for you is the most important criterion, you may choose to sit in a place where you want less, but in a large house, rather than sitting in a very desirable area. As a result, searching for places by sorting out the most important items for us will save time, prevent us from wasting our energy.

But if your expectation is that real estate brings you a steady income, then you should consider other things. If you want to develop yourself and become a “professional” real estate investor, you should not consider renting and earning income by buying housing. Residences pay back the money you invest in more years than the shops. Moreover, it is properties that are more tolerable to wear. When you want to rent a dwelling that you buy today, when your tenant leaves after 5 years, wet volumes such as kitchen, bathroom, wear and tear condition called “physical obsolescence” will be very decisive.

But such physical obsolescence in shops does not lead to a loss of rent value as large as in residential buildings. There's also a tax dimension to the job. You pay the tax on residential investments, commercial personal investments are subject to withholding, and it is general practice for the tenant to pay this withholding. In short, the counterparty pays the tax on commercial investments. But if you do not consider yourself a professional in this business and are afraid to take risks, then housing is a good investment for you under any circumstances. Then you should invest by choosing the right regions, projects, risk-free properties and places with potential.

So where should the investor who is thinking of buying shops for investment should pay attention? First, it is necessary that the rent that the property in question will bring according to the purchase price is acceptable. Today, usually shops amortize themselves between 13 and 15 years. In amorti labor, our mean is that the investment you make is self-reimbursement.

For example, if a shop you bought for 420 thousand TL provides an average monthly return of 2,500 TL, we get 420.000/2.500 = 168 result. If we divide this figure by 12 months, then it turns out 14 years. In this case, at the price of 420.000 TL, we can say an acceptable price level. Of course, the location of the shop, its size, availability, potential according to the dynamics of the development of the city, its visibility and how keen the owner is to sell the property, as well as many aspects of the price of the shop will be decisive.

One thing to consider in commercial investments such as shops may be that the property is in the development areas of the city and the expectation of consumer demands to change in the other way in the long term. For example, when the construction of a shopping mall in the immediate vicinity is finished and the mall opens, how will the shop you intend to buy will be affected by this situation?

Apart from these, it is very important that the shop is easily rentable. A shop that cannot be easily rented will create a loss of value for the investor when it stays empty for a long time. It is also very important that a shop bought for investment is easily saleable. If necessary, the presence of liquidity ability (saleability) will always positively affect the value of the shop.

If you want the investment you made to remain to your children and gain value in the long term (after 10-20 years), if you do not have an income concern, you also like the risk, then you are a candidate to become a plot investor You may be. In this case, you should invest the plot on the developing axles of large cities and where the city ends, and as a land owner, you should check your investment often.

If a conscious real estate investor makes the right predictions at the right time, he will win. In fact, the result is simple. There is no room for coincidences in real estate investment.

You can find our previous post at https://www.endeksa.com/tr/blog/yazi/gayrimenkul-degerleme-nedir-degeri-etkileyen-faktorler-nelerdir link.

* Endeksa partner EVA Real Estate Valuation Consultancy Inc. prepared with the contributions of.