Monday, December 27, 2010

Evaluating the Right Property in Your Area by Ravinder Tulsiani

Evaluating the Right Property in Your Area

In the wake of ongoing financial crises and sub prime mortgage affects, it is necessary to go for certain stringent norms that will ideally help you in deciding on the property of your choice and above all making it the most valued.

Following common parameters should be taken into account:

Mortgage Interest Rates: The level of mortgage interest rates are important criteria to watch out how the real estate market is moving in the area. Check and assess whether the mortgage rates are moving up or down. More is the value of mortgage interest rates results in higher mortgage payments, resulting in poor cash inflows for real estate investors. On the other hand, if the mortgage interest rates are going down then it is a positive sign showing demand for real estate and high appreciation rate values.

Employment Opportunities: The real estate properties providing ample of job opportunities in around the locality has more appreciation, than those having property elsewhere. Therefore, it is necessary to do some preliminary homework on finding the real estate property in the regions that offer more employment opportunities.

Income: Concentrate on the housing price index. Opt for the area where there is demand for workers and high rising incomes. As a simple thumb rule, the more you earn, more is your spending on the expenses such as housing payments, electricity, etc.

Migration Rate: The net international migration and the inter-provincial migration plays significant role in increasing the housing demand for the area. More is the migration rate in the area, greater will be the amount of resources available and more will be the prices of the real estate property in the area.

Natural population Growth Rate: Before going for a particular are, it is necessary to see, whether, the birth/death ratio is on the increase or is it slowing down. If any region shows high natural population growth rate, then, there is prospects for greater housing stocks in times to come, and this eventually means, more real estate growth in the area.

Level of Consumer Confidence: Consumers who exhibit more confidence and lust on a property of a particular region will show more demand for the home ownership than those where the consumers show lack in confidence of buying the property. Homeownership rises with confidence and this results in more demand for housing stock in the area.

Movement of Resale Market: The region where there is tremendous movement in Resale market, will show many transactions in terms of high sale and purchase of real estate property. Greater the demand for the resale property, will eventually make it easy for you to buy the property as an investor.

What are the Vacancy Rates: As the rule of economics, if supply increases the demand, the vacancy rates fall. If there is over supply of property taking place in a particular region or area, the vacancy rates tend to move up and thereby extremely reduced cash flows. Now, for the property owners, it becomes a point of concern to meet their financial expenses, which eventually leads to price fall in the real estate property of the region.

About the Author

Ravinder Tulsiani is a published author who has written about personal finance, real estate, self-help and online marketing.