Real estate Tycoons have a new buzz word to help them find the most profitable real estate investment
The Good old way of Property Investing, Is it holding you back?
The popular old way of finding a good investment was to follow one great rule and that was ‘location, location, location.’ But this has really become redundant and is an over simplified approach to finding a great investment.
We have all heard about properties that are essentially in the same area or location but they increased at different capital growth rates over the long term. We have also heard of people who have bought overpriced properties in the wrong places at the wrong time. In today’s more complex environment where information is vital to effective decision-making, the new motto is ‘research, research, research.’
Research can often make the difference between a successful property investment and a poor one. It is one thing to say that research is the key to effective property investment but what is it that you need to research? The most common question is, “What am I looking for?”
One of the most important things when researching property is that you need to have an end goal in mind. There are three key goals that I maintain and that I think investors should also focus on. Ensure that the area you choose satisfies these main goals.
Interconnected with these three main goals are six key drivers of enduring capital growth and they all have an influence, one way or another, on property markets and the appeal of an area as a possible investment location. Understanding these drivers and how they relate to each other is fundamental to your research when choosing an investment location.
The six key drivers of long-term capital growth are:
1. Population Movements
2. Economics and Employment
6. Supply and Demand
In Australia this can be compounded what was a lousy location months ago could be the new Eldorado’s when a mining company announces that they are opening a new mine in or around that area, once never heard of towns suddenly are in the spot light with real estate values doubling and tripling in the space of a few years. Only research and knowing what to research will make the astute investor a fortune.
As you can see there is a lot of background work to be done before you even look at a contract. Investing in property can be very daunting. However if you have a strategy in place, know what to look for and stick to your system, without being overcome with emotion, you will be well on your way to success.
TIP: Research out plays location, in today’s volatile real estate environment.
Remember to ask all the right questions, focus on the long-term and be confident. There is one key ingredient that I haven’t mentioned yet and it is the most important of all – ACTION!
I know many people who suffer from ‘analysis paralysis’ – they do lots of research but they never ACT. The research is a means to an end and those who act on it will inevitably win. This does not mean that you disregard location as an indicator just do not be fixated on just getting the best location there are many other factors that have to be considered in to days real estate environment.