Basic Principles of Investing in Today’s Market

Location, Location, Location.
You’ve heard it a thousand times. It’s known as the 3 most important factors when buying a property, and it is easy to see why. The location of your property dictates how much yield and capital growth you get, which ultimately decides how well you do.

And yet people still get it wrong. Many investors only consider locations within the area they live, rather than asking themselves where else they may gain even better and higher returns. It may seem to make sense to invest in a location nearby, you can pop in to check on it, help fix any problems, and keep an eye on the local market better.

However, this approach to property investment could be costing you thousands, or even tens of thousands of dollars in lost opportunities in the long term. Compare this to professional property investors, who own property all around the country. By asking themselves, "Where can I buy property that will give me a great return?" instead of asking "What's available down the street?", they stack the odds in their favor.

Investing in property is all about the numbers, this is something prosperous investors realize very early on. Don’t think in terms of whether you would like to live there or whether the property is down the street from you. Instead, pay attention to the basic principles of investing:

-The likely return and capital growth.
-Buying costs and selling costs, including taxes.
-Costs to borrow money/interest rates.
-How attractive the property will be for likely tenants/buyers.


Recognizing A Great Location.
To build wealth through investment property, you need a location where there will be capital growth, where the property will rise in value. This can ultimately allow you to purchase additional properties, and build your portfolio. Factors that suggest growth include:

Demand over supply.
Usually due to increased population, often brought on by a high number of jobs created and lower prices than similar properties elsewhere.
Low interest rates.
People are more likely to buy, including income properties, as they will be more confident they can cover all costs and make a good yield.
Growing, developing economic areas, such as regenerated towns and cities.