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| Knowing your Market Area |
There are 6 key methods which you can use to find a property but before you actually start the search, it is imperative that you know the market area to be a successful investor.
To fully understand the market you'll need to narrow your focus to a few selected areas as your target point for purchasing investment property. Because of the number of properties on the market available in any city you simply cannot know the entire city market. In fact, in the larger cities the average investor with limited time will be doing well if they have a good grasp of only one or two percent of the market.
Based on your analysis of the demand and supply issues in each city you should be able to narrow your focus down to a few selected areas. You'll need to do thorough research in these areas before choosing a property to purchase.
You must know what prices properties in your target area sell for. You need to be able to walk into a property and know within 5% what it is worth and what it would rent for.
When it comes to understanding the property market, there is no better way than old-fashioned foot-slogging. You need to get out and visit home opens, look at rental properties, and be aware of the market so that when an opportunity arises you will be able to seize it.
Astute investors always keep a careful eye on property values in the areas in which they are interested in. This way, they can avoid paying too much for a property and can always be in a position to distinguish a bargain.
So what is market value? In general terms, the market value of a good or service is the price at which a willing, but not anxious, buyer will pay to a willing, but not anxious, seller for that good or service.
For products which are plentiful, transacted often, and are largely the same as each other, determining market value is relatively easy. But property is typically not like this. Each property tends to have features that make it unique in the market - its location, size, age, etc. Even two properties side by side on the same street will be valued differently if they differ in size or age. To make things even trickier, property is typically not transacted very frequently, making it hard to compare a property you are interested in to a similar one that has sold recently.
Fortunately there are a number of information sources available to make your estimates of market value as accurate as possible. It's also a good idea to drive through the neighbourhoods you are interested in and check with real estate agents the prices that recently-sold properties fetched.
