Property Selection - The Vital Component in Your Investing Tool Kit

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Property Selection is
The Vital Component in
Your Investing Tool Kit

Property selection, Choosing the right type of property and the right location for your investment properties will make an enormous difference to your ongoing success.

This can make a huge difference...

Here is a example of just how much difference effective selection can make.

Let's say that you were considering two properties of similar size and features. Both were townhouses with two bedrooms, two bathrooms and a one car garage.

However Property A is new, the purchase price is $330,000 and it will rent for only $280, giving you a rental return of 4.4%. ($280 times 52weeks divided by $330,000 as a percentage.)

The Ideal Type of Investment Property

The ideal type of investment property has these characteristics:

1. Buy new investment property
   
2. Priced at the median price for the area
   
3. Is in demand with tenants
   
4. Has potential for future growth
   

Buy new investment property

There are a number of good reasons to focus your purchasing of investment properties on new properties.

• Higher depreciation allowance to deduct from your tax bill.
  
• Lower maintenance cost and therefore lower overall cost of ownership.
  

Median Priced Property

Buy property that is priced at or near the median price for the area.

The reason for this is simple. The property you want to offer for rental, especially when you are just starting out, is property that is closest to the most in demand type of property in any area.

This will ensure two things, that you always have a supply of ready and willing tenants to rent your property. (This is a very important part of your investment property business.)

Secondly, if your unit or townhouse is in demand then the value of your investment property will rise. This is perhaps the most important part of your investment business.

We've only covered two reasons so far.

Read on to discover why it is so important for you to become knowledgeable at effective property selection.

Buy a Property that is in Demand with Tenants

We have already touched on the importance of this above. Here are some other considerations to take into account.

A property in a better area will attract a better type of tenant and that will ultimately lead to less problems both with property maintenance and perhaps even collection of rent due and avoiding a default on rent.

Generally well located median priced property will prove to be your best bet for long term capital growth and rentability. After all the real money to be made in real estate is not by buying a property and reselling it a short time later for a small profit.

No the the real money to be made in property is to buy and hold as many well selected pieces of investment real estate as you can for as long as you can. In fact if you maintain a philosophy of just not selling this will in time provide you with a continually growing rent stream as well as a rapidly increasing equity base.

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Return From Property Selection To Freedom Steps With Property Investing

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