Real estate is an investment tool where investors typically generate income by purchasing physical assets. Houses, buildings, plots, and commercial structures are among the most common examples of real estate. Investors who make the right decisions in real estate investments, often referred to as property investments, can achieve significant profits in the long run. To accomplish this, every investor must follow the processes, ensure that everything is in order, and take the necessary actions after the purchase.
In this article, we will discuss how good planning positively impacts the entire process and detail the factors you should control before and after making a real estate investment.
Things to Consider Before Purchasing Real Estate
Before investing in real estate, you need to pay attention to various factors such as timing, pricing, and location to make the right decision. Changing market conditions, purchasing power, and other factors require you to have a good checklist before making property investments. Here are the most important points to consider before investing:
Define Your Investment Purpose
The foundation of the real estate purchasing process is defining your investment purpose. When you clarify your objective, you can create a healthy roadmap for the process. Ask yourself the following questions when determining your purpose:
- Are you aiming for passive income through rental earnings?
- Do you plan to purchase a property based on market trends and sell it in the short term?
- Are you interested in investing in developing regions for long-term gains?
Clear answers to these questions will shape your investment plans and simplify the process.
Analyze the Market
Once you’ve decided on the area for your real estate investment, it’s essential to conduct market research. Factors such as the average sale prices in the targeted location, properties with high rental yield potential, and future appreciation prospects are crucial for the success of your investment. During your research, observe the surroundings of the property you plan to invest in and compare it with similar properties to determine average prices.
By conducting this analysis, you can better understand the competitive landscape of the area and make the right choice. To save time and achieve more precise results, consider working with a real estate investment consultant.
Set Your Budget
Before purchasing real estate for investment, assess your budget and consider potential additional costs during the process. You can work with an expert real estate consultant to comfortably analyze your budget. You may choose to invest using cash only or take advantage of bank loans with favorable interest rates. When making a cash purchase involving a significant amount, be sure to take your future investments into account as well. Additionally, you can benefit from government incentives and support your financing with low-interest loans.
Analyze the Technical Features of the Property
Conducting technical analyses for the planned high-yield investment property can save you from future expenses. Therefore, include aspects such as the age of the property, whether it requires repairs, floor plans, and suitability of the square footage for your purpose in your checklist. Technical reports, zoning status, and earthquake resistance are also crucial details during the real estate purchasing phase. You can work with professional real estate consultants to carry out this analysis.
What to Do After Purchasing Real Estate
After conducting the necessary analyses and selecting the most suitable investment property, you enter a new phase. At this stage, taking careful steps is essential for the value and future profitability of your investment.
Effectively Manage Title Deed Processes
After purchasing real estate, ensure all official documents are accurate to protect yourself from future problems. Check the title deed and contract to confirm that the purchased property is officially yours. Obtain a confirmation letter from the municipality regarding zoning to ensure there are no restrictions such as project cancellations or construction bans.
Obtain an Insurance Policy
Obtaining real estate insurance is an important task to address after the purchase. Start the insurance process as soon as possible to protect your property against potential risks. You must also obtain mandatory earthquake insurance (DASK). Additionally, home insurance is crucial to safeguard your property against unfavorable conditions. When renting out your property, this coverage remains important. To protect against risks like rental income loss, consider purchasing rental income loss insurance.
Start Maintenance Work
Begin maintenance and repair work for your investment property as soon as possible to increase its value. Complete processes such as electricity, water, and natural gas setup, and inspect for deficiencies. When purchasing a worn-out property, prioritize insulation and renovation.
Taking these steps can enhance your property’s appeal and revenue potential if you plan to rent it out. You can also make final adjustments to the interior within your budget and collaborate with an expert during this process. It’s crucial to budget wisely and observe what’s in demand by analyzing neighboring properties. For this, you can consult a professional real estate advisor.
Handle Tax Obligations
As a real estate owner, you should be aware of certain tax obligations. Ignoring tax-related matters may lead to delays in legal and financial processes. Some of the tax obligations that arise after purchasing real estate include:
- Property Tax: You must pay property tax regularly every year after purchasing real estate. Ensure you report the purchase to the relevant municipality before the year ends if the purchase occurs within the final three months of the year.
- Title Deed Fees: When a property sale is completed, fees such as title deed charges may arise. Monitor this and pay the specified amount.
- Rental Income Tax: If you rent out the investment property, you are required to pay tax on your rental income.
Planning the real estate purchasing process properly and completing the post-purchase tasks on time will help you avoid future issues. To make this process more efficient, you can create a checklist or work directly with a real estate advisor.
