What Makes a Good Investment Property?
A well chosen property is likely to deliver greater return in the future; not only in the form of capital growth but also in the form of rental returns. In order to maximize investment return, here are some key considerations to make:
The Right Stage of the Property Cycle
The property market moves in cycles. Property values may rise due to strong market growth, remain steady or even decline during certain phases of the cycle.
The Right Location
Location is integral to acquiring a good investment property. If the location is chosen correctly, the chance of gaining higher returns from your investment is far greater than if the location is not desirable and suitable for those looking to live close to amenities.
Factors to consider are:
• Close proximity to certain amenities increases the desirability and value of a location and property; these include:
o Public transportation
o Public facilities (post office, libraries, parks, medical centers, etc.)
o Shops and markets
o Lifestyle activities (restaurants, café strips, beach, etc.)
Therefore, it is important to consider proximity to these when buying your investment property.
• When selecting an area to purchase a property in, try to avoid those that are likely to be dependent on a sole industry i.e. manufacturing. Although it can be beneficial when the industry is doing well, if it falls, your property’s value may decline as a result.
The Right Property
When searching for an investment property, you should aim to secure one which will be in continuous demand by tenants, as well as future home buyers. One factor you should consider is appropriateness of the property for the average age of residents in the area.
The Right Return
Many property investors make the crucial mistake of choosing a property based on emotion, rather than finances and logic. A bad purchase may result in capital growth below the market average or rental income which does not come close to covering the monthly costs to maintain the property. It is therefore vital to do your research to establish your strategy before making a purchase.
Researching the Market
Over recent years a number of web sites have been established to enable consumers to access current sales results and historical sales data. This information will assist you to gain a good grasp of current market trends and historical growth patterns.