When you are involved in property investment you are likely to come across a number of different opportunities. You need to look at all of the opportunities and decide if any of them are worthy of your investment. How do you do that? Well you need to follow the advice that we have for you below.
What are your Financial Goals?
Everyone is going to have a different view on what financial success is. Some people will want to live in a property in a specific area and own a specific car. Others will want enough money to give them the freedom to do whatever they want.
The most important thing is that you have financial goals. If you don’t then you cannot assess whether a property investment opportunity will take you nearer to your goals or not. Take the time out to define your financial goals (or re-examine them) as they are essential to guide you through your property investment journey.
What are the Numbers?
You need to critically examine each property for the potential revenue that it can generate for you. You need to calculate a cash flow for each opportunity that interests you. You can look at historical data and estimate if you can sustain the income levels or even grow them.
Maybe you are looking at a property that needs a lot of renovation work to generate good profits. How much will you need to spend on the property in order to transform it into a good money maker?
Is the Location right?
You need to do your homework on the local area to be certain that a property investment opportunity will provide the returns that you are looking for. You need to know about the economy of the area, employment numbers, current population and growth, the most popular type of properties in the area and so on.
Are there any large companies moving into the area bringing more employment opportunities? Are the numbers of people moving into the area increasing? What kind of property is in demand – houses for families or flats for couples?
Is the Price right?
If you pay too much for a property then it can literally take years for you to make any return on your investment. You must have a very good idea how much a property is worth before you start to make offers.
Find out what the local house price growth is in the area and then find out how much the property sold for last time it was on the market. Do the maths and estimate what it should be worth now. Also take a look at how much comparable properties are selling for in the area. If the price is not right then move on.
What is the True Potential of the Property?
If the property has been previously rented and you want to continue with it as a buy to let opportunity then what is the scope for you to improve on any previous rental yields? Will it be easy for you to find suitable tenants who will be willing to pay the rent that you want?
If you need to renovate a property then you must know if this is really worth doing. Renovation estimating is not easy and often things are underestimated. Can you add value to the property without spending a lot of money?