Understanding Local Dynamics is the Key to Property Investment
National averages give you a decent impression of how things are going over the national scene. Yet, investors, who are worth their salt, will tell you why it may not be enough. You need to have a tight grip over the local dynamics before you think of property investment. Aren’t the reasons simple enough?
Local dynamics cannot be ignored
What if the national unemployment rate is 5% and your prospective investment area has an unemployment rate of 7%. You will want to back off, won’t you? Now, what if the per capita income is much higher than the national average in your hunting area and has spiked the prices of properties likewise. Of course, you would not want to venture into these areas with your relatively modest budget, would you?
Hundreds of local economies with different impulses
It is not that difficult to fathom that within the umbrella of a nation there are hundreds and more of local economies breathing; each with a unique impulse. This ‘impulse’ has to be understood. What worked for the real estate in the mining area demographies won’t work for the inner CBD area. You will face different results while buying in inner CBD high-rise apartments and heritage areas.
Due Diligence is the key
When making property investment, conduct your Due Diligence. Find out all you can about the comparable sales figure– one that gives you an insight into the rates at which properties are selling in a close radius from yours. Find out if there has been an appreciable decline or hike in capital growth and rental yield values. Learn whether there has been any counter-cyclic move in the last 6 months or so. Find out if there are expressways and other mores of infrastructure coming up in foreseeable future and what is the level of gentrification. All this will summate for you what the property might hold for you in times to come. Local dynamics, after all, can’t be ignored, can they be?
