The real estate market has continued to go down. The property prices continue to take a dive. It seems this trend will continue for a while. This means most properties will be worth less tomorrow than they are today. A question arises how to identify a good deal in a depressed market? All kinds of properties like houses, condos, villas are losing value every day. Same is the case with commercial real estate properties. Everyone now buys property below market value. To get a good deal for real estate investment is necessary for investors and businessmen.
Learning to recognize a good deal takes research, education and above all experience. A standard to determine the good real estate purchase deal is to study different factors. First one is cash flow. It means will the property provide income? It also depends on many factors like strength of local rental market, the interest rate on financing. Second is Leverage. It is important for investors because the less cash they put down on each property, the more properties they can buy. If the properties go up in value, their rate of return goes up exponentially. Third is appreciation. Buying in the right neighborhoods in the right stage of a real estate cycle will result in appreciation and profit. Fourth is equity. The properties in which you are investing have equity or not? Equity has number of forms like discounted price, a potential fixer upper and a rezoning opportunity. Last but not the least factor is risk. This is the factor on which very few investors consider. As an investor you should ask from yourself what can I do if my assumptions are wrong? Or do I have a plan B? If my observations and considerations are fail then what is alternative option I have to opt to save my investment.
These are some rules to judge a good real estate deal even in a depressed market. Costa Rica real estate investors and hard money lenders consider them before start investing in any project. It will help them to recognize current market trends and property values.
At last I would suggest all investor to check these standard factors in real estate business. Whether your deal is a commercial construction project, a high rise acquisition or a residential housing development, it will help you in all situations. You can complete business goals and requirements by considering them in your business.