Property investing is a fantastic way to increase your monthly income or grow your capital.
It’s important to remember though that investing in property is a huge commitment and a decision you should not take lightly. You need to ensure you are ready and prepared for the commitment of investing in property before you get started.
Part of that preparation is understanding what factors contribute to a good property investment and what you should aim to avoid. With careful consideration and due diligence you can determine whether a property investment opportunity is right for you.
In our experience we have established three key factors to consider when determining a good property investment.
When looking at a property investment opportunity location is always an important deciding factor. Location quality is often reliant on your target market, therefore, research is crucial.
Before moving forward with a property investment you must research to discover the key factors the location offers.
Transport links within an area are a great factor to consider. This offers convenience to tenants and therefore increases the potential for the value of your property to grow and generate a solid return.
Paired with great transport access, availability of schools is also a major factor when investing in property. If families are your target market this will be high on their list of priorities, therefore, having the offering of easy access available is vital.
Further research into the location of your property can allow you to envision the future of your investment. Determine whether the area is set for new development, bringing in more businesses, job opportunities, leisure facilities and therefore residents.
Development in an area will generate opportunities for your investment to grow in value over time - potentially increasing your profit.
Meanwhile, whilst focusing on the location of your property investment, it is important to analyse the surrounding areas.
Surrounding areas can often have a large impact on the area you are investing in, therefore, awareness is crucial.
The key to a good property investment is sourcing a property that you can add value to.
Doing what it says on the tin, adding value by making improvements increases the worth of the property, growing its appeal.
Your renovation venture can range from adding a new coat of paint and some fresh tiles to adding a whole extra room. With the right research, team and budget, your property’s potential can soar.
It is important to be mindful of contributing factors during the process of organising your value adding renovation though.
While your ideas may be extravagant, you must keep them inline with the properties surrounding yours to ensure you meet the needs of your market. Venturing away from the basis of surrounding properties will potentially create a struggle in achieving rental of the property.
Meanwhile, remaining within your budget is essential. Budget is important for the success of your renovation, however, allocation doesn’t stop there.
Having the means for property maintenance throughout the ownership of your investment lifts a weight off of your shoulders. Unexpected costs can crop up at the worst times, meaning allocating a budget for this specifically can reduce stress and problems.
The potential for unexpected issues can be reduced by a thorough investigation of the state of the property. Whilst we all love a challenge, don’t try to solve the impossible.
This property is a spacious 4 bed with a kitchen diner, perfect for a large family
This fantastic property is located in an estate with close transport access and three local primary schools
You're in property to add to your portfolio and make an extra income so choosing the right opportunity for you is important. By investing in a property that meets your objectives you grow your investing potential.
Consider how this property will contribute to your investment goals and therefore, the cashflow it will generate.
Before commiting you must determine whether the potential rental price of this property will cover your costs or not. Failure to cover your costs will cause you to be running at a loss.
This is important to take into account when setting your rental price, however, other factors also determine the final sum.
Rental prices of neighbouring properties are a huge influence on the monthly price you set. Often, your property will have the same offerings as these properties and so their rental price should act as a ballpark figure when setting yours.
The quality of your renovation can also be reflected in the price, allowing you to gain return for your investment.
Another factor to reflect in the rental price setting is the appreciation value of your property. Properties are usually considered to increase in value over time, therefore, your property will earn you a higher income years from now.
There are many factors to consider when investing in property, each needing careful thought to ensure you make the right decisions along the way.
The location of your property investment is hugely important as a deciding factor. The location and everything it has to offer will greatly influence the rental opportunities of your property.
Your desired location will be dependent on your ideal target market and the objectives of your portfolio and investments.
If your ideal market is a young family then you will aim to source a property within a neighbourhood which holds fantastic transport links and great schooling availability.
Meanwhile, properties within the city are best suited to a market of young professionals.
As market groups’ needs and wants differ it is important to establish who you would like to target and how they fit with your objectives beforehand.
It is all about finding a property that you can add value to. By increasing the worth of your property you consequently grow the potential of your property.
Considering your budget along the way and ensuring you remain within it can reduce the opportunity for mishaps and stress.
Meanwhile, ensuring you hold a budget for future unforeseen circumstances can be extremely beneficial for your property, your tenant and your finances.
The ultimate goal is to produce extra cash flow. This means aligning property potential with your objectives - ensure you are increasing your cash flow and not losing.
Renovation quality, neighbouring properties, development and population each have effects on the success of your property over time.
These factors can contribute to the growth or decline in the value of your property so remaining up-to-date with these changes and market trends will allow you to reflect these effectively in your rental pricing.
Disclaimer: This is information based on our knowledge gained throughout years of experience, education and learnings. This information is open to interpretation, therefore, you must carry out your own due diligence regarding the subject.