Top 5 Facts to Consider When Investing in the Real Estate Market in Sri Lanka – Read These to Know What to Look For

One of the major facts that affect the value of a property is its location, and it will continue to be the most significant factor that decides the profitability in real estate investing. Factors such as how close the property is to facilities such as transportation and the status of the neighbourhood play a prominent role in residential property valuations. A key factor to take into account when considering a good property location is how the area is expected to develop during the investment period; for example, what you may see as a peaceful land behind your residential property may become a cacophonic manufacturing facility one day, diminishing the value of your property. Therefore, it is vital to do a thorough check on the lands surrounding the property in which you're hoping to invest in terms of its ownership and intended usage.

Valuation of real estate is required for a range of endeavours such as sales listing, financing, property insurance, taxation, and investment analysis; however, for most people, determining the purchase price of a property is the most helpful factor of real estate valuation. Since apartment projects in Sri Lanka carry unique features like floor plan, location, lot size, and amenities, valuing real estate at first glance can be difficult, but concepts such as supply, and demand of a given area will certainly factor into deciding the over-all value. Individual properties are usually subject to appraisal methods such as the sales comparison approach and the income approach.

An increased cash flow is essential to a good rate of profit on an investment property (cash flow refers to how much cash is left after expenses). Profit from real estate can come in various forms. For instance, companies will send you regular payments for any structures they would add to your property such as cell towers. Raw lands could also be rented out for agricultural production. If your real estate is a residential property built by real estate developers in Sri Lanka such as John Keells Properties, you could generate income via basic rent, where the tenants must pay a fixed amount for each month.

Although loans look convenient, they also come at a large cost. Obtaining a loan also means committing to the cost of interest spread over a long period of time. Make sure that you understand how to handle loans of this kind and avoid massive levels of debt accumulating over the years.

A lack of clarity on your investment purpose, especially if the investment is mortgaged, can lead to unprecedented results, including financial distress. Clearly set your goals before moving forward with your investment. For instance, identify your purpose for buying the property – whether it's for self-use, leasing, or selling.