Choose your poison; become a niche expert

Article 3 of 8 in the series: YDL Property Investment’s Eight Golden Rules of Property Investment

Home For Sale Signs & One Sold in Front of New Homes

It is important to choose your property investment niche carefully

Each property and subsector has its own reality. Unlike stock investments, the residential property market does not have a stock exchange to inform you or assist you with determining fair value for your investment. Unless you work with or for a company such as YDL Property Investment as a professional in the property investment business, the residential property market is complex and there are just too many factors to know the whole market gainfully. By focusing on a specific niche and becoming an expert you can develop intimate knowledge and an understanding of the market. You are then in a position to buy and sell on an informed basis.

The main objective of choosing a niche is to overcome one of the few weaknesses of the residential property market – the lack of information, such as you can find for the stock exchange. You cannot easily extract detailed, expert, independent information on the property market.  Trying to get that for the whole residential property market is impossible, so you will find it almost impossible to get the necessary inside information to identify the best investment opportunities.  You can only hope to get that by limiting yourself to one area of the market, perhaps a suburb or set of suburbs, or to only townhouse or flats in a particular area.

It’s not a bad idea to start by looking at all the investment possibilities available to you. But at an early stage, you should decide what niche in the sector suits you.  There are a number of markets that you can choose from including the student market, corporate rentals or townhouses. Also, your choice could relate to the kind of person you are.  For instance, if you are a handyman, you might prefer to buy properties that need renovation.  Your skills must be tempered by what the market wants, so work closely with an agent or other market expert in deciding what to renovate and to what standard.  Alternatively, your choice might be to invest in properties that do not need much attention, freeing you to concentrate on research and managing your growing portfolio.

A key step in the process is to decide what area you will invest in.  You must decide whether you will invest in the suburb or city you live in, because you know it very well, or if you will invest in areas that you think will take off in the next few years. You may also choose a particular area because of the lower house prices which allow you to get into the market. There are many options and as a beginner you should look for something that you feel comfortable with.

Concentrating your attention will quickly pay off with an understanding of all the complexities of the niche.  These include the different realities of the individual properties, the subtleties and nuances of the information you receive, your negotiating strengths and weaknesses and the redevelopment or management opportunities to create higher and more assured returns.  This will allow you to see important issues in an instant that many others can’t.  This will give you a great advantage – and it will save you time to enjoy the growing freedom from your property investments.  After all, isn’t that what property investment is all about?