As a property owner, cash flow should not be your major concern when purchasing any property rather your focus should be about the property appreciation or the value the property will have at the long run.
There are some factors that determines property appreciation but some are more important than the others:
- Land: When seeking for a property the physical structure should not be the only things you have in mind rather you should consider land. One thing we should know is that land does not depreciate in value. No matter the size of the land it keeps appreciating over the years.
- Location: the physical appearance of the property also shouldn’t be the first thing to consider rather the location, if the location is not favorable then you have missed it. Location is one crucial aspect that homeowners seek for before any other thing, once your land is at the right location it sure will appreciates.
- Future development plans: Before you purchase a property you need to know the government and commercial plans for future development. If the area undergoes infrastructural and commercial developments, this will provoke real estate appreciation.
- The physical property: I might have made you think that this is not part of it but it matters. If you have an attractive house and a less attractive house side by side in your land, the attractive one will sure give you a lot of money but overtime the house will give you less percentage compare to what the less attractive one will fetch you i.e. the attractive house will give you 5-10% interest while the less attractive house will give you 20-30% interest as time goes by.
- The economy: There are other things that makes real estate appreciates and those things are beyond our physical control. The country, nation, and local economy are major determinant of real estate appreciation. For instance if Nigeria’s economy is doing fine and they decide to employ more people, the demand for housing will definitely rise, land and properties will also rise up. In, reverse everything will fall.
- Lending guidelines and interest rates: if lending guidelines is very stiff potential buyers will run away. But Similarly, if interest rates is high people wont be able to afford loans, which means that real estate prices will shrink. However, if the interest rates is lower people will seek for houses, prices will rise and real estate value will like wise appreciates.
Am sure this tips has opened your mind for what to look out for when seeking for properties.