How to Select an Investment Property?

Selecting an ideal investment property takes a lot of skills and experience. This is because an ideal investment property should be able to generate a Return of Investment of at least 8% every year. This property should be able to provide a yearly capital appreciation of at least 10%. The following are just some of the things that comprise the best type of investment property:

1. Limited Supply of Land – Real Estate became an attractive asset class because of its limited supply. This is also the reason why you should let demographics play a part in your criteria. Make sure that you choose a property that will be most likely ‘in demand’ in the future. As long as it’s in the right location, the value of your land will definitely continue to increase.
2. Area with an Increasing Population – Make sure that the area that you are considering investing a property does not have a possibility of population decrease. Avoid towns wherein the population is dependent on a certain industry because this would make the area prone to a population drop once the principal employer and industry in that town leaves.
3. Area in a Good Location – Your area should be near good schools, transportation, shops, and any other public amenities since location is the mantra of real estate. The following are the things that people basically need and they make the area very desirable as well:
   1. Close public transportation and a fast route to the city
   2. Facilities such as libraries, post office, and parklands
   3. Shopping Areas
   4. Markets
   5. Schools

The following lifestyle attributes of most people should also be considered:

1. Near the beach
2. Café Strips
3. Restaurants
4. Affordability for the Renter – You have to figure out the average household income in the area that you are planning on investing in. A good rule to follow is for you to make sure that the rent of the property does not exceed 40% of the median household income. 30% is the best bet for most investors. That is why it is better to get an average property that is located in an average neighborhood.