How to identify a good investment property

Various factors influence the suitability of a property for investment purposes, Seeff highlight some of the most important ones below.

Smart Investors Select the Perfect Property Location

Location, location, location is the phrase that comes to mind, and for a good reason. The area in which your investment property is located has the greatest impact on the return on investment you can expect.

Factors that play a role in whether an area is a good investment location or not are the standard of living in the area, the standard of local amenities, the distance of these amenities from the property and of course the safety of the area. If the average rental in a specific area is in a reasonably high price range, this means that it’s a location with excellent investment potential. The next step would be to find the tenants who can pay the asking price.

A great location will attract the right tenants. Consider the demographics of your target market. For example, a single professional may appreciate a lock up and go unit close to a business district and entertainment, whereas a family will be looking for nearby schools, safety and healthcare facilities. Your property investment strategy will determine who your ideal tenants are and which properties you will be selecting to invest.

Successful investors have a vision for the property

It stands to reason that if you find a property in an ideal location, and it has a few minor flaws, you may be able to pick it up for a bargain. After that, if you can envision its hidden potential and repair or upgrade it with minimum expenses, you will find yourself in a position to create equity as the property’s value has been improved.

If you have calculated all possible expenses, planned your finances accurately, and spent wisely, you will be able to set the rental income at an appropriate amount. This rental income should cover the maintenance and management costs and leave room for generating and maintaining positive cash flow.

An adaptable investment property is a profitable one

The property market, the economy and supply and demand are all factors which can change at any point in time. If your selected investment property, and your strategy, allows for quick response to such changes, you have a recipe for success.

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