Everyone is excited about the first property that they buy. It is a significant milestone in life. Some people may prefer investing in a commercial property, while others may prefer buying a residence first. If we look at the statistics, we can tell you that people are more inclined toward buying a residential property as their first real estate. Mohsen Motamedian, a real estate expert, shared some of the things that you must keep in mind before buying your first real estate property. This will help you crack the deal in a better way, but these points will help you shortlist a property that will be beneficial for you in the future. So, let us move on to see what Max Motamedian has for us.
Things to Keep in Mind While Buying Your First Real Estate Property
Mohsen Motamedian has given us a list of pointers to consider before buying a real estate property. Let us go through them one by one, and we are sure that you will find them beneficial for yourself.
- Type of Property & Purpose – The first important thing that Max Motamedian wants you to consider is the type of property and the purpose of your purchase. Are you looking for a rental income, or are you looking for a place to stay? If you are looking for a rental income, a commercial property may make more sense to purchase. The rent yields are higher for commercial properties. However, if you want a residential property, you know your options. Also, look at the subcategories. For example, while buying a residential property, understand if you want a row house, apartment, etc.
- Location of the Property – The next important thing is the property’s location. This plays a critical role in deciding the property’s price, and you should not ignore it. The location would also define your standard of living. Some locations have a higher price when compared to other areas in the same city. So, please consider the property’s location and make a list of all the locations that you would like to consider this property.
- Size of the Property – Another important factor is to match your requirement with the size of the property. As per Mohsen Motamedian, many people tend to ignore the size of the property in the excitement. You shouldn’t do it, and you should always map the size of the property with your requirements. In the case of residential property, look at the number of people who would be staying in the house. In the case of the commercial property, consider the nature of the business while buying the house.
- Full Payment vs. Mortgage – Managing finance is essential while buying a house. You surely don’t want to default on the payments. So, before buying a house, Max Motamedian says, you should analyze the difference between full payments and payment plans. Consider how much you will be paying extra. If you are buying property for investment, look at the opportunity cost of the capital as well. Don’t buy something that you can’t afford because this is where things can go wrong.
- Age of the Structure – You must also look at the age of the structure. It is important to analyze how much you would have to spend on refurbishing the property after purchasing it. The age of the structure would determine the usable life. Also, look at the state regulations around this point, as this will help you avoid any complications in the future. You can even request an expert to inspect the property for you as they know things better.
- Connectivity – Max Motamedian says that it is important to have connectivity to the property. Without that, the property prices would be lower, and the rent yield won’t be high as well. The roads should be proper, and you can look for public transport connectivity if you don’t have a car. In addition, you might also want to check the internet connectivity in the area where you are purchasing the house. Today, internet connectivity can’t be ignored.
- Furnishing & Maintenance – Another important factor is the furnishing you are getting with the home. This way, you can understand how much extra you will have to spend before moving in. In addition, look at the water supplies, electric supplies, and the drainage system. You must also look at the monthly or annual maintenance that you will need to pay after acquiring the property. There shouldn’t be any unpleasant surprises afterward.
- Broker Commission & Documentation – It is most likely that you will be buying a property with the help of a broker or a consulting firm. Look for the reviews of the broker and understand what kind of commissions these brokers are looking for. You can try and negotiate the amount here and save some money. Please make sure that you also verify the documents of the property. It should be free from any mortgage, and all the other registration details should be in place.
- Economic Factors – Mohsen Motamedian says don’t buy the property when the market is booming. Try and time the purchase to the slowdowns. Look at the supply and demand. In addition, understand what the macro and the microeconomic factors tell you about the economic conditions. Stock indexes can give you insights about the same as well. Sometimes, if the prices are inflated, it might make more sense to rent the property. So, all these factors are very important while buying your first property.
- Job Security – The last factor that Max Motamedian has shared is job security. When the market is expanding, the salaries offered may be very high. However, this doesn’t mean that you have job security. You don’t want to be stuck in a situation where you are laid off and have a mortgage burden. So, correlate the job security, your savings, and the purchase decision.
Never make an impulsive decision while buying a property. This is a big decision and just like all other investments, analyze the investment along with the returns. Even if you are buying a residential property, understand that eventually, you would want to sell it to move into a bigger home. At that point, you want the property to yield better returns. So, follow these points, and we are sure that you will be able to benefit from them.