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You have found the area / town to invest in? What next?

Some experts say talk to agents, watch the internet, read the local papers and if you find a property and the sums add up go ahead and buy it unseen, therefore keeping emotions out of the equation. Whilst we have done this it requires a lot of trust in your agents and the services they use.

If you want to be more hands on here are a few tips…

If you live in the town or area start walking or take up jogging or even get a dog to walk. Not only does it do you good and get you fit you’ll get to see so much more than if you just do drive bys. A casual comment to an owner about say a smart garden can lead to a lot of local information not found on the internet or in a paper.

Visit the area at different times of the day. One gentleman found an ideal property in what looked like a good neighbourhood and during the day it was just that. However in the evening though the area turned into the local red light district!

Make sure that the person selling the house is actually the owner. It is not unknown for dishonest tenants to try and sell the house that they are renting. In the UK you can check this for yourself through the online Land Registry rather than wait for your solictor, or in other countries your solicitor or conveyancer will check that for you.

Dominic Farrell has a theory to take the world and by a series of deductions bring the search area down to a post code.If you don’t know of Dominic Farrell he is the founder of UK company Beware the Sharks.

Using this method where is a good place to buy property at present?

The USA offers some great advantages especially with the current mortgage & credit crisis for the prepared investor.

India has such a huge population with a rising middle class and strengthening economy offering some fantastic investments.

The UK housing market is currently going through a re-adjustment after many years of growth and has an aging population. For those that can capitalise on these opportunities now is a great time to invest.

The Australian property market is at different stages in different parts of the country. For Perth the growth bubble burst and prices at the moment are returning to more realistic values. Sydney has spent several years as a very flat market and is beginning to grow, albeit in the early stages of the cycle. Melbourne has seen some good solid growth in the last year to 18 months after a previous over supply of apartments. Darwin and Adelaide are experiencing good solid growth but this is to do with the resources boom and in the case of Adelaide< the Ministry of Defence is investing heavily in the north of the area. Brisbane seems to have experienced fairly consistent growth due to interstate and overseas migration. However rising interest rates could still influence these markets.

So what to look for?

When looking at a city or town you want to look at what drives the area economically. Look at the infrastructure for example educational facilities, health care services and transport.

Other information that is useful is area population (rising or falling), new infrastructure planned for the area such as new schools, hospitals, airport, rail links, by-passes etc.

The good news is that most of this information can be found either at local councils, regional offices or even via their websites. Once you’ve got all this information the next stage is the fun part – to actually get out there and look at the area. This will be covered in another article.

Without fail the first question we are asked when we mention that we are property investors is “Where’s a good place to buy?” I tend to reply that it depends on what sort of property investor you are. If someone is new to property investing that can stop them cold.

Before going into any investment decide why you are doing it. It is cash flow because you need extra monthly money or is it equity because you are thinking more about the long term. By the way a property doesn’t have to be one or the other it can be both, and that goes for the investor too.

We are mainly cash flow investors because we want our money returned to us now not in 10 years or more when you don’t know what the market will be like. Thinking of not knowing what the market will be like in years to come we’ve known investors who have bought off plan thinking that the properties will be worth more in years to come only to find out that they still had to pay the agreed price even though property prices had fallen.

In the long term property prices do go up but it’s usually not in a straight line so there will be dips along the way!

When I ask "What sort of investor are you?" I don't mean whether you are good or bad, but rather what sort of investments appeal to you. Some people like to own something that they can see and feel, and if you fall into the sort of category property investment may appeal to you. If you care more about the money rather than the actual investment vehicle then you can think about shares or property. Depending on the laws in your country there may be more benefits to having one type of investment over another. For example in some countries you can borrow money to buy property but not to buy shares. This is because property is seen as a more stable investment. However with both property and shares there are many ways of making money in both markets.

The first step before any investment is to get some financial education. This can be through books, seminars, DVD’s, what ever appeals to you. Just don’t go into any investment without knowing anything about it since that increases your odds of failure. And yes I do speak from experience!

Difference between shares and property

• Shares: not always able to get loans to buy them

• Property: it's tangible, you can see and feel it

• Property: you can improve the value of the property by renovations, extensions etc.

• Both can give cash flow is you use the correct strategy 

• Shares are more liquid than property

• Shares cost less to start than property

• Property has more associated costs such as stamp duty (depending on your state and country)

• Property: If doing buy to let then there is issue of tenants

• Property has a higher loanto value ratio (can borrow up to 95% for a property but ususally only 50% for shares)

• Shares are in a global market

• Property is a more local market

What you tend to find is that the average investor will switch to shares if the property market goes down, or switch to property if the share market goes down. However the ideal is to make money in any market. As I’m writing this many property markets around the world are in trouble due the to credit crisis in the USA. Falling property prices if you are a owner and need to sell are a worry but if you are an investor it’s like going to a sale. That doesn’t mean that you can just buy any property but it means that you can get them at a lower price. If you have shares you can certainly make money in a falling market as well as a rising market.