Investing in real estate is usually all about capital growth. That’s why choosing a property with the potential to increase in value is the most important decision you will make.
When weighing up the right property for your portfolio you’ll want to consider several areas.
Firstly, if cash flow is important (and it usually is), a property with steady rental income is vital because its cash flow will make the holding of your asset more affordable and provide you with an income.
You also want to consider the pros and cons of for different types of residential property. A house, vacant land or apartments, all have the ability to outperform each other at different times. For example, investing in an apartment could mean you pay less for maintenance than a freestanding home. Likewise, you could invest in a vacant piece of land which provides no rental income buy could appreciate more quickly if purchased in an area with limited supply.
Another thing to be aware of is certain areas offer a higher rental yield. So it is important to do your homework, as often these properties provide lower capital growth opportunities.
Finally, it is also important that your property you go with suits the demographics of renters in the area. For example, if you invest in a property near a University, then having more bedrooms is an asset as they’ll be in high demand. On the other hand, a family home will always be more desirable if it is on a quiet street and close to schools.