Making a sub-standard investment property selection has a series of negative implications for investors. A poor decision isn’t easily rectified as divesting out of property incurs substantial costs.
Also, the time frame between placing a property on the market and receiving the proceeds of the sale is lengthy compared with other asset classes.
The optimum property selection will bring about a chain of events that will result in a successful outcome for investors.
The correct choice results in the property doubling in value in approximately 10 years. This in turn leads to a build-up of equity, which can be used to borrow against for further investment or for lifestyle purposes.
The optimum investment selection also leads to positives in regard to the rental equation. The best property choice results in minimal vacancy, and a pool of high-quality tenants ready, willing and able to rent the property. High demand on the rental side in turn leads to regular rental increases. Over time this gives the property investor higher disposable income.
Another great advantage of blue-chip real estate is that it is recession-proof. Even when the economy takes a downturn there still is demand for quality real estate. I was active in the real estate industry during the recession of the early Nineties, and during this period quality real estate was still highly sought-after.
It is certainly reassuring to know that an asset can be easily liquidated should the need arise during a downturn.
The greater majority of buyers do not have the skill or knowledge to identify the optimum investment property.
Therefore, on most occasions their selection will result in inferior capital growth, minimal equity, high vacancy periods, low rental growth, troublesome tenants and having to accept massive price reductions to offload their asset during economic downturns.
It certainly pays to seek independent professional advice before signing on that dotted line.