Property Investment’s deadly sin: Not understanding local market conditions

. . . .  and how YDL Property Investment overcomes this

Article 1 in the series of ‘The dangers of property investment offshore’

Investing offshore is a process of putting the pieces of the local conditions puzzle together

Investing offshore is a process of putting the pieces of the local conditions puzzle together

Do you know someone who has invested in the United States property market and had disastrous results?  Has their experience caused you not to pursue your own offshore opportunities?

This article explores the dangers of uninformed investing in foreign territory and highlights how expert help, such as that provided by YDL Property Investment, manages these risks.

Many of us would like to have investments offshore. They offer us comfort in knowing that not all of our investments are single currency based.  Long term investments in a country with a hard currency is an attractive proposition for many South African investors.

Often our urgency and excitement to set up overseas investments causes us to leap before we look carefully.  This lack of diligence can cost an investor dearly.

Lack of proper research

The USA has 50 states and over 30 000 cities and towns. How does one decide where to invest?

The answer requires a good understanding of the economic and property market drivers of a particular city. Factors to consider are supply and demand drivers such as state and city growth drivers, population growth, income growth, property price growth, affordability, interest rates, buyer confidence, supply of inventory and absorption rates.

In addition, buy-to-let investors need to understand market rentals, where tenants will come from, projected rental escalations and the like.  Many buyers skip past this step as it is simply too much work. This increases the risk of getting it wrong.

Lack of local knowledge

It is difficult to invest in another country as – even if you do the research mentioned above – nothing beats the power of local knowledge. Which suburbs – and streets – are the best and which should be avoided?  To property experts, simply walking down a street can provide them with a gut-feel for an area. Does it look to be in decline, or are signs of growth and vibrancy evident? Are shops closing down, showing a struggling economy, or are new developments springing up?

Some investors rely on property investment reports such as Trulia or Zillow to assess what they are being offered by brokers. The problem is that these websites are often far too general in the information that they provide.  Much of the data is metro- or county-wide, whereas the information required to make an informed decision needs to be specific to a property’s location.

How YDL Property Investment combats these challenges

The answer is simple: YDL Property Investment establishes a presence in the areas in which they do business.

For example, YDL Property Investment identified that Atlanta in the United States of America offers prime property investment locations. Having identified Atlanta as having high potential areas, YDL Property Investment set up a local presence there.

This means that YDL Property Investment buys properties direct from distressed sellers, meaning lower purchase prices for investors, compared to properties sold by investment brokers.  YDL Property Investment’s teams are local experts in the city and can therefore make quality recommendations to clients.  As property investment experts, the YDL Property Investment team knows their local conditions down to street level.

There are many companies who are more than willing to help potential investors invest in property offshore.  There are many people who have gone down this road, only to live with massive regret when their investment fails to deliver against their expectation, or at all.

Contact YDL Property Investment if you’re interested in USA property investment.  You’ll find they have all the credentials and expert knowledge to deliver quality investment opportunities that won’t let you down!