With today’s economy, investing, where possible, is essential. After all, if 2020 has taught us anything, it’s that we need to prepare for the unexpected. If property investment is something you’re considering, here are some things you’ll want to keep in mind.
Real estate values can fluctuate on either end of the spectrum, with some failing to produce returns and others having an average or higher than average return rate. While real estate as an investment can be high risk (it’s one of the reasons commercial banks often ask for a large percentage payment down before approving a commercial mortgage), like most high-risk investments, the rewards can also be great. After all, there’s a reason so many of the world’s magnates, moguls, millionaires and billionaires have made – and increased – their fortunes investing in real estate.
You can make money from real estate properties in two different ways: with the appreciated value of the property over time, and cash flow from rental income.
There is no one-size-fits-all when it comes to property investment, so you’ll need to do your homework and make a decision about the type of property you’re looking to purchase, based on your personal goals and available finances. Are you considering a vacation rental you can market through the likes of Airbnb or VRBO? Perhaps you’d rather invest in a long-term residential property, like a duplex or an apartment. Or perhaps you’re looking for something a little more simple, like a vacant lot in an up-and-coming community.
Despite the ups and downs of the real estate market, most properties increase in value over the long term. Home values in some areas have been on a steady increase for nearly a decade. This is known as appreciation. The key to buying real estate that appreciates is location and timing. That’s where working with a trusted and licensed real estate agent is a must.
While a rental (or income producing) property can offer a more immediate return, it also requires active management, from day to day decision making, moving on through maintenance and management of the property. If you have a vacation rental property, you’ll also have guest services to consider. Some of your main questions should be:
- Who is going to deal with your tenant’s or guests requests and payments?
- How should repairs and maintenance be handled?
- What physical improvements might need to be done to increase rental income on your property?
- If you have a vacation rental property, how are you going to market it?
- How is the area changing, and what does that mean for your investment?
- When would be a good time to sell or buy?
There are many decisions to be made with a Bahamian real estate investment, and knowledge is power here. To ensure you’re making an informed choice, gather your team of professionals. These should include your accountant, your banker, and your attorney, of course. Another key member of your team? Your licensed professional real estate agent. They will assist you in familiarizing yourself with the Bahamian market and its opportunities. Whether you’re ready to start your search, or think you’d like more information before making a move, reach out to us. We’re here to help.
Curious about vacation rental properties? Check out some of these previous articles we’ve shared: