When looking to invest in property it is always important to have a structured approach to ensure you get just what you are searching for. Through time I have developed the following construction and I will always stick to it so I know I have done all of the homework required to generate a solid investment and reduce any possible risk to a level I’m comfortable with.
Step 1 – Research
This is possibly the most important element of any investment decision. When I talk about a researching’ a possible investment, what I mean is to do all of the necessary homework to learn if the investment is best for you and if it is going to offer the return you are searching for. Sometimes it is Tempting to miss research and possibly stick to a tip from a buddy on a possible investment. Lots of individuals also do not do research because they do not know where to obtain the essential information and thus they may make a blind investment, trusting on great returns. Even worse, they may put off making the decision and stay stuck in proximity while the asset begins to show strong growth.
So what needs to be researched before investing in property?
Location – such things as the people, main industry, main employers, future investment in infrastructure, tourism, local universities.
Property costs – average, median, recent sales, Potential rental yields, past and predicted growth.
There may be more Areas you will need to research depending upon your situation but the primary objective here is to perform the study to a level you are comfortable with. You can never do too much research. Thorough research will give you peace of mind to make confident investment decisions. Whatever you are trying to achieve, somebody has already done it before and the info is out there. It might be in books, papers, special reports, published online or available from realtors. You can get the information you will need to make a certain investment choice.
Step 2 – Know your Numbers
Note: This step primarily deals with rental yields and does not take a property’s yearly appreciation or depreciation into consideration.
Once you know all of these amounts you can then determine how much you can afford to invest within your Budget, what rental yield you are looking for and whether you may acquire a Monthly cash surplus or in the event you will have to contribute towards its monthly upkeep.