AVOIDING BAD PROPERTY INVESTMENT

Investing in real estate has always been a popular choice by many people to hedge against inflation or as an alternative to the more volatile equity market, writes Allison Lee in Propertyplus. For the aspiring lot who want to make money this way, the most common goal is to buy cheap and sell high. One can often avoid getting burnt by a bad property investment by observing certain fundamental do's and don'ts in real estate investment.

The most important factor to consider is the location of the property. Those keen on investing in properties should make a visit to the actual site of the property. The factors to note are the proximity to rivers, graveyards, places of worship, hill slopes, power stations, highways, open spaces, hawker centres and markets, as all these would affect the resale price of the property. Investments in secondary locations generally do not fare well. As an example, a shoplot facing the main road has a far better resale value than a similar shoplot at the back of it. The difference in the rental could be as high as between 20% to 40%. Accessibility is also vital as the property would not appreciate if it is a hassle to get in and out of the area.

When buying properties from a developer, it is important to first do some research on the background of the developer to avoid being straddle with the problem of an abandoned project. A simple search with the housebuyer's association or the real estate developers association would easily help identify a fly by night company.

Another important factor to verify is the land tenure, especially as some leasehold properties may be sold with tenure that are much shorter than 99 years. Leasehold condominiums are priced lower than a similar freehold property, but as the land tenure gets shorter, the value of the condominium gets lesser.

Project density is another factor that affects the resale value of the property. A project with less density has a better opportunity to appreciate considerably when compared to a project with a high density.

It is important to look beyond the exterior of the whole house before buying it. A thorough check of the whole house for roof leakages, termites attack, flooding, etc. would save a lot of problems later on.

Real estate agents are good at selling their products and that is why they do it for a living. It is always better to to seek advice from lawyers and consultants before signing the contract. Investing in real estate requires some basic knowledge of the property cycle, A property bought during the boom time wouldresult in low rental rates during the slum and one would be unable to sell the property for a god price.

These are the main guideslines for property investment ,but there are other things that have to be taken note off. One has to check on the transferability of the property, whether it has the necessary approvals from the approving authorities for the renovations. But at the end of the day a little bit of luck goes a long way to find your perfect home.