Location, Location, Location
location, location - 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 you get, and how much capital growth,
which ultimately decides how well you do.
By Alan Forsyth
And yet people still get it wrong...
Most investors only consider location
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 near to you - you can pop in to check on it, help
fix any problems, and keep eye on local market better.
However, this approach to property investment
could be costing you thousands, or even tens of thousands of pounds, euros
or dollars in lost opportunities in the long term. Compare this to professional
property investors, who own property all around the country they live
in, or even all around the world. By asking themselves "Where can
I buy property that will give me a great return?" instead of asking
"What's available down the road?", they stack the odds in their
Investing in property is all about the
numbers, this is something I realised very early on - forget about whether
you would like to live there or whether the property is down the street
from you. Instead, what I pay attention to is:
The likely return - yield, and capital
Buying costs and selling costs, including taxes
Cost to borrow money, ie interest rates
How attractive the property will be for likely tenants/buyers
So how do you recognise a great location?
To build wealth through investment property,
you need a location where there will be capital growth ie where the property
will rise in value, which builds wealth, which can ultimately allow you
to purchase additional properties, and build up a portfolio.
Factors that suggest growth include:
1. Growing, developing economy eg Countries entering EU, regenerated towns
2. Demand outstripping supply ie more people want property than can be
supplied, usually due to increased numbers arriving which could be due
to higher birth rate, high numbers of jobs created, lower prices than
similar properties else where, immigration laws being relaxed.
3. Low cost of borrowing – if interest rates are very low, people
are more likely to buy, in particular for buy to let, as they will be
confident can cover all costs and make good yield. It is for the above
reasons that UK investors have started to look overseas recently, and
why international investors target developing countries, and growing cities
when deciding where to invest.
It is for the above reasons, why UK investors
have been looking overseas over the last year or so, and why international
investors target developing countries, and growing cities when choosing
where to invest. Remember the location of your investment will dictate
how well your investment performs.
Alan Forsyth is a full time property investor and developer with
10 years experience in UK and overseas. He is managing director
which offers free independent advice and tips on property investment,
courses, countries, strategies, mortgages and much more - with
a free newsletter every 3 weeks giving latest tips and offers
to over 500 investors. Sign up today at the site for free independent