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PHILOSOPHIES
* Investments in Cities vs Coasts
* Below market value investments
* Below market value today vs future
* Buyers and sellers markets
* Compound capital growth
* Fees vs Commission
* Finance vs Growth
* Power of finance
* Growth vs Discount
* Location, Location, Location
* Rental market oversupply
* Speed vs Caution when investing

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Property Investment Philosophies


Does location really matter?


Ultimately property investment is all about location (and price).

Unfortunately this is something most investors often forget when caught up in the buzz of investing.

Location determines the supply-demand & risk-reward dynamics of property investment.

Supply: the larger the supply of property for a given demand the more competition you will have from both a rental and resale perspective.

Edge of city locations tend to have more supply of more open spaces which can be built upon which could potentially increase the supply, compared to more central locations where supply of land is more limited.

Planning laws can either mean that large amounts of building can take place (eg Bulgarian coast) or very little building can take place (eg nature reserve or national park).

Coastal locations often suffer from large amounts of building and oversupply.

Natural geography such as rivers or mountains can restrict the amount of building that can take place, coversely areas with little natural building hinderances can become oversupplied very quickly.

Demand: location largely determines relative demand in an area.

Macro factors such as economic success (or slump) determines the amount of money locals have to spend on property, and whether there are the jobs available to keep the supply of people maintained/increasing in a certain location.

Micro factors such as whether your property is close to a metro station (or other transport), is it next to a factory or pub, near a major road, does it have a nice view or is it close to a sought after school - just to mention a few factors - can all substantially affect the demand for your property.

If you can buy into locations where supply is restricted yet demand is good and likely to increase then the chances are that you will be able to rent or resell your property. Thus your risks are reduced and the chances of obtaining healthy rewards are substantially increased.

A good question to ask yourself when investing is "who would live here?", if you can easily come up with some simple answers then your risks are reduced.

Overall, we recommend buying in good solid locations where supply is not going to be swamped overnight by a new development and where demand is always likely to be high (eg because it is in a desirable area or next to a metro station). Such locations will always make you the most money for the lowest risk over the long term.

Location is not just important it is the fundamental basic of property investment.
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