What Constitutes Your Property Investment Research?
Have you ever found yourself undone by a wrong choice of property location or by a counter-cyclic investment? Well! If you have been long in the game, you would have found yourself inconvenienced by such gaffes sometime or the other. This makes it my duty to make the newcomers more aware of what lies ahead. In this light, importance of the question “what makes a good investment property” cannot be overestimated. Can it be?
Invest keeping property cycles in mind
Property market moves through cycles. There are the crests or the peaks, the phase of stagnation and the phase of decline. Both upsurge and decline may manifest themselves in two ways- one, there can be a sharp rise and fall and two, there can be a steady but perceptible rise and fall.
Once or twice, you can be lucky enough to gain in counter-cyclic investments (after all, there is definitely something called the law of averages and a place consistently offering poor capital growth may surprise you sometime) but ideally you should keep the property cycles in mind and invest accordingly. The best investors are those who maximise the peaks and budget for the troughs.
Strategic location is of paramount importance
Location, for many good reasons, is considered a buyer’s top priority by many. To place yourself strongly, you should choose locations which display diverse factors of growth. If your property location is sustained by a single industry, its bust might lead to a rapid devaluation of the entire locality. You will do well to refer to the case of the mining districts.
As an aside, it helps to have a walkable neighbourhood; one which is also proximal to the transport hubs, consumer destinations, lifestyle spots, schools, churches and hospitals.
Rental yield as important as capital gains
I have suggested you to take into account the historic capital growth in the area of prospective property investment. While this can take care of the capital gains factor, you also have to keep an eye on the rental yield of the place. After all, it will determine the rent you can ask from the tenants. You already know how this can affect your mortgage commitments positively or negatively.
Comparable sales figure
Due Diligence helps; it most certainly does. Take for instance the Comparable Sales Figure. Now, this figure neatly highlights the sales price recorded by all the houses sold within a short radius from your home in the last 6 months or so. Naturally, this gives you a heads-up as to what you should be ready to pay. This also affords you an insight into the kind of remodelling budget you should allocate for yourself.
Following these ideas, you may be able to cover yourself completely as an investor and landlord and maintain an investment equilibrium, otherwise so rarely achievable.