Any smart property investor will do their research before selecting the best location to buy their next investment property, but with so much information available in the market place, many of these investors would like to have a sure-fire method for success.
In a recent article from Think & Grow Rich Magazine, a case study example provides one such formula for property investors.
Typical investors generally select a property which is close to home, however it is recommended instead to use a Market>Area>Property approach.
Using this method, a property investor should pursue the following steps:
- Select a city with the best potential for growth.
- Find an area with a balance of yield and growth, along with good infrastructure.
- Select the optimum size and quality investment property for the area.
Property investors who use this approach generally have more success as it allows them to fast track their portfolio by catching each cities growth wave and enabling their property value to rise faster. This allows investors to leverage equity and acquire properties at a much faster rate.
When following this method investors should also consider the following points:
- Choose a market which has consistent population growth.
- Consider employment, wages and consumer confidence. Higher wages mean people can afford more expensive housing and pay therefore increase a properties rental return.
- Stay away from markets which have already undergone a strong growth period (10-15 per cent per annum) because after strong growth you can expect a price correction.
- Compare vacancy rates with other areas, if they are lower than average it is a good sign the area is desirable.
- Check there is not an oversupply of vacant lots or dwellings nearby.
- Always buy below the median house value.
- Check proximity of the property to services such as public transport, shopping, parks, and nearby employment.
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