When Is The Best Time To Buy An Investment Property?
Every property investor wants to buy the right property, at the right time, for the right price. This seemingly simple formula is actually quite tricky to get right. The factors in the equation will be different for every investor and ultimately will come down to each individual’s circumstances and intentions.
So, how do you choose the right time to buy an investment property?
When you can afford to
This will mean different things for different investors. For some, it will mean they have enough cash deposit to take out a loan on an investment property. Recently, interest rates have been historically low, encouraging more investors to secure loans to invest in property. However, if you’re in a position where you have cash in the bank, low interest rates mean you aren’t earning you much in the way of additional cash. For these people, looking into investment properties that can achieve better returns in the form of rental income means their money is working smarter and yielding a better result.
When market conditions suit you
Property markets are cyclical, going through peaks and troughs driven by consumer demand, economic factors such as interest rates and taxes, and development or infrastructure in certain areas. It can be extremely difficult to pinpoint the ‘ideal’ time to invest. Another way of looking it would be to assess how much you can afford to spend on an investment, then find a location with good quality properties in that price range, that offer good rental yield to help with repayments. Real estate websites are now jam-packed with useful information to help you sort out what kinds of properties you can afford, in which areas, and what kind of rental return or capital growth you may achieve.
Other property options, such as serviced apartments, offer properties to investors using a location-specific business development model, meaning properties are located in areas with good economic development, improving demographics and significant investment in infrastructure. Serviced apartment operators invest significantly in researching areas that meet a specific criteria that can support their business model, meaning investors can be assured they are purchasing a property that will sustain itself for the life of the investment.
When you know what you want to get out of your investment
Your personal circumstances will dictate what ultimate result you want from your investment. Investors with a long-term view will be looking to buy property with the prospect of good gains that can be reaped upon sale, or that provide good rental income as cash income throughout the lifetime of the investment.
Residential real estate is the traditional route most investors take. There are, however, other strategies that can yield great results for investors. Serviced apartments are a great option for investors looking for cash returns in the long term. The serviced apartment you purchase isn’t leased to an individual tenant but rather a commercial operator for a long-term period (usually five years) at an agreed-upon rate. The operator then sublets the apartment, hotel-style, for short-term stays.
The benefits to the investor looking for reliable cash-flow are numerous: long-term rent, no vacancy periods, and an on-site property manager to deal with day-to-day issues (meaning the investor doesn’t have to).
Purchasing an investment property will always be a big decision, but knowing your budget, your personal goals for the investment, and looking at all the markets available to you will help you make the right decision.