Finding the Sweet Spot of An Investment Property

Why is one area a smart choice for property investment while another area makes for a very poor alternative? What should you consider before buying a rental property? Foresightedness is crucial. You will have to anticipate which area is likely to turn into a seller’s market in foreseeable future. The idea, after all, is to pluck the fruits and reposition your property investment into the next big area….and the process goes on.

The property fundamental to stick to

The above plan is in sync with the time tested fundamental of the property market- buy in a buyer’s market and sell in a seller’s market. While selecting an area for your investment property–one that you are going to rent out and not occupy yourself–it is important to prefigure the major economic drivers. When you are able to zero in on an area, look for the sweet spot, which is the precise point where you can make the maximum.

Look for the sweet spot of an investment property

This sweet spot of an investment property can be found with Due Diligence. First, filter only those areas which have a low unemployment rate. Next, select areas with high job growth potential. Choose areas with diverse growth factors so that your property does not suffer when the area’s best market bottoms out (for instance, many property markets were hit hard when the mining sector collapsed because they were over-reliant on it).

Look for the top-growth areas from within the city

Any housing market piggybacks on low living cost and low housing cost. Unless these two criteria are met, an area quickly fizzles out of the sweet spot. Also, it is wise to determine the direction in which the major growth is happening in any city.

No city, even the very best ones, is short on areas which are perennially languishing. To compensate, there are other areas which are fast rising up the ladder. These areas are marked by government spending, infrastructure initiatives and high capital growth. Seek such areas for your sweet spot.

Facilities and amenities in proximity

While buying a rental property, keep an eye on the amenities and facilities available. Tenants always look for reputed schools (for their children), wellness facilities, gymnasiums, shopping hubs, ease of transport, and emergency services in close proximity to their residence. This is a wish-list you cannot ignore while buying your investment property.