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Top 10 Factors That Influence The Value Of Your Real Estate Investments

Real estate investment is complicated. You probably do not need to be told that though. You have looked at the variables; everything from the damage past owners have done to the mineral composition of the foundation can affect the value of your real estate.

There is no trick to looking through these variables. It would be dishonest to say that there was one variable that outshined all others, and it would be inaccurate for us to act like we know your property better than you do. What we do know, through a lot of research, is what is normal.

We know what factors can make real estate a greater liability, and what can make it more secure. So, here are the ten most prevalent things that change a property’s value.

Water Damage

This is far and away the most common. And it is also the most subtle. The big issue with water damage is the fact that it can hide in the walls and under the floor. You can literally have it bubbling up beneath your feet and not notice.

It is also not an easy problem to solve without rebuilding, so check for it thoroughly.

Neighborhood Crime Rate

A lot of people are caught off-guard by this. Especially if you are buying lots of property, it is easy to just view real estate as data points that are self-contained. But the outside world can and will butt into a property you own. The last thing you want is drug refuse on your property.

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Age and Condition

In contrast to a lot of this list, age and condition are two factors you are probably thinking about already. Just be sure to think about it on more than just the surface level. The façade of a property is important, but so is the integrity of the building, from pipes to drywall.

Smart Home Features

This is a factor that will almost always bring the value of a home way, way up. And the best part is, if the previous owner of the home got smart home features installed, then those features belong to you once you own the home. These can do a lot to add to a home’s security too.

In short, the convenience of smart home features raises the price. Then, the security of smart home features raises the investment value in other ways.

Demand

This one might seem obvious, but a great many real estate investors forget about it. After all, real estate is always valuable, right? That is true. But sometimes it can be too valuable. And if the value of real estate is greater than the demand for the real estate, then it is hard to move it.

This is made worse by the other side of the coin: Supply. Once you own real estate, you kind of have to wait for the demand to come to you. It is hard to supply your real estate to move anywhere else.

City Planning Regulations

It is practically a scary story to tell real estate investors before they go to bed: “An investor, just like you, bought a building to turn it into a business… Only to discover businesses aren’t allowed in that area!” Terrifying, we know. But it is a story worth repeating as a cautionary tale.

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So, be sure to read up on the regulations of the city your property is in before buying it.

Compatible Aesthetics

Let’s say you buy a gas station and want to turn it into a diner. One issue you are going to have is beautifying all of the concrete that used to serve the gas station quite well.

Basically, some properties just disagree aesthetically with some plans for those properties. Now, this is not to say that you cannot turn a gas station into a diner. Aesthetic compatibility is more of an art than a science. Just be aware if you’re trying to turn water to wine.

Usable Space

However good you are at converting spaces aesthetically, also be aware when you have space that simply does not work for what you want to use it for. The concrete of a gas station simply cannot work if you are trying to build a daycare. That space is unusable for that use.

Of course, you could always take the concrete out. But that is a much different task than just repurposing an existing property. You either have to be really confident that the area of your property needs a daycare to justify that cost, or never put yourself in that position to begin with.

Safety Regulations

Safety regulations are very different beasts from city planning regulations. City planning is all about keeping similar businesses near each other so that they can compete more easily, and so consumers and workers can know where they need to go for those things.

Safety is more about making sure that you are not dumping waste into a river, as well as making sure your employees and clients are not nearby anything they should not be. You do not want your daycare right next to a lumberyard, for example.

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Economics

This is not what you think it is. When we talk economics, it sounds like we are saying “the price is affected by the price”. But what we are really saying is that “the price is affected by inflation.”

Inflation, relative value of other properties, how similar businesses are doing, all of these things stand to tell you how much value you can get out of executing on your plan to use a property.

This is probably the biggest consideration you have to make. Do not buy a home, bulldoze it, and start a business that nobody is going to want to buy from.

Conclusion

There are obviously far, far more variables at play in regard to the value of your real estate. But these are good places to start to make sure you have the basics covered in its value. Visit Teifke Real Estate to learn more.

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