All Investors need to establish an exit strategy before making the purchase. This probably holds true for Investors looking for Appreciation or (Capital Growth) over any other investment goals. Appreciation is where real wealth is created and to get the maximum appreciation for your investment you will need to avoid these common mistakes.
Not identifying where the path of progress is going: Example – If new businesses are being opened on the north end of town which may also stimulate other businesses such as gas stations and motels to sprout up around it, it is highly probable the path of progress is going North. As the North side of town is becoming a favored location the values in the North side of town may be rising faster and higher. The opposite may even be happening in the South side of town. If the South side of town is getting older and infrastructure dollars are all being spent on the North end of town, the South end of town may be an area in decline.
Not looking for job diversity within a city: One Horse towns such as Detroit or Las Vegas that are fueled primarily by one industry are at high risk for sustaining cash flow or capitol growth to the properties. When economic uncertainty arises and your town’s primary industry is affected, your cash flow and Capitol Growth are suddenly in a decline.
Not purchasing the sweet spot: Every investment has a sweet spot (the product that can make the most amount of money or Appreciation (Capital Growth). Example – If you are purchasing a single family home, many purchase only on price point. The seasoned investor knows that sweet spot is the home most likely to sell. The home most likely to sell is the home that the most amount of people can afford and is willing to purchase. This is the 3/2/2 – 3 bedrooms 2 bath 2 car garage. Investors are often compelled to buy 2 bedroom homes because they are cheaper and they have a nice demand for rental. Home buyers however often will pass by the 2 bedroom knowing they want to grow in to their space or have ample room for their needs.
This information is a moving target and changes often. Come visit us often to see where the location is that offers the best opportunity for Appreciation and Capitol Growth. Or Call today to talk to an investment strategist.