Selecting Property For Investment
Investment in property requires skill and patience, as
well as an excellent knowledge of the market. When you buy investment property
it is a big step, so you want to make sure that the property you select is not
going to lose you money. Although it is hard to say what a ‘good’ and ‘bad’
property is, investment in property can be made easier by reviewing a number of
criteria before agreeing to buy a property. If you adhere to these criteria
then your investment in property is more likely to see healthy returns.
Budget
Obviously one of the first criteria to look at when trying
to buy investment property is your budget. Investment in property can be very
profitable, but only if you are clear about your budget and rigidly stick to
it. Getting carried away and buying something over budget because you think it
is a lovely place can result in disaster. Although it might work, it is better
to keep within your budget and make smaller gains than to go over budget and
end up with large debts. Having a firm idea of your limits, and not looking at
properties that are above or very close to those limits can solve the problem
of your budget. Look for places you can easily afford first, and then if
successful you can build upon this.
Start small
Although the idea of owning a house or large property
might seem appealing, smaller units and more affordable, less risky and easier
to maintain. Investment in property involves minimising risks, and buying
smaller units is one way to do this. Smaller units such as flats are easier to
rent out as more people can afford them, and usually involve less maintenance.
For example, most small apartments do not have a garden to maintain, and any
other building expense is shared amongst the other units.
A room with a view
One factor to consider when selecting property is the
view. Property with a good view invariably commands more money than other
similar sized properties. If possible, try and find a property with a desirable
view. However, do not commit to a property simply because of the view. Investment
in property that has a good view and nothing else is not good business sense.
Growth areas
To make investment in property worthwhile you need to
select a property within a growth area. A growth area is one that is improving
its facilities and desirability, but has not yet attracted large numbers of
investors. That means the prices are still relatively low, and the increase in
price will be steady. Such areas include suburban areas that are in easy reach
of the central districts of major cities. Small villages with good transport
links are also highly desirable. However, finding an untapped growth area is fairly
tricky, and requires a good knowledge of market trends.
Local knowledge
One of the best ways to make investment in property is to
invest in an area you know well. Although it may seem desirable to rent a
property in a certain area, if you do not know that area well you are at a
disadvantage. Local knowledge often gives you the advantage you need, in that
you can see first hand the changes and growth of an area, and know where is
desirable or not desirable to live.
Treat it like your home
Perhaps the most important factor to consider where investment
in property is concerned is that you should treat the investment like it was
your home. That means you should be as careful with your investment in property
as you would be when buying your own home. Carry out all the necessary checks
and surveys, as well as any practical problems. If you cannot see why someone
would want to live in a property, then it probably is not a good investment.
Whether you buy investment property to rent or sell, you need to make sure the
property is desirable. If it is not desirable to you, then leave it alone.