Many factors contribute to achieving above average capital growth when investing in property. For starters, when deciding upon where to invest, you should choose an area with a growing population. This will ensure demand for rental real estate in that locality, and therefore put future pressure on both price growth and rental growth. To ensure further demand for your rental home, it is best to make sure that you don't go for something at either the bottom or top end of the market. In reality, your best bet is to select a middle-range rental home that will be affordable to most people, more specifically, the middle-classes.
Millionaire Australian real estate investor Hans Jakobi adheres to this philosophy. Top end properties are too susceptible to recessions. During the good times, top end real estate can do very well, but boom times never last, and top end properties are the first to take a hit at the outset of a recession. Likewise, low-end real estate can under perform the market in terms of capital growth because the localities in which they are situated tend to be less desirable. Not to mention that the type of tenant you are likely to attract with a low-end property could prove to be a more high maintenance type of tenant, with a higher likelihood to default on their rent and a higher likelihood of taking less good care of your rental home compared to an average renter.
The following linked article on selecting the right investment property covers many other elements that form the recipe of successful investment rental home selection. There are also a number of Real Estate investment training courses in the Success University member's area from renowed experts such as Robert Allen, Loral Langemeier, Claude Diamond, and William Bronchick. You can obtain a 14 Trial access to Success University for only $2 to check them out.
It is also of importance to analyze the numbers pertaining to your potential real estate investments just as you would do with stocks. You need to compare price-earnings ratios; internal rate of return; gross versus net yields; compounding interest, and before and after tax cashflow. There are many software programs out there that can perform this type of analysis. One of the leading programs is called the Posh Property Program. It allows you to analyze and compare multiple potential purchases against one another with a comprehensive Inspection Check List which you can print out and bring with you when viewing potential purchases.
In conclusion, it is not only important but also extremely worthwhile to take the time to educate oneself about property investing before diving in to your first, or next, investment. It is worthwhile to understand the elements that will contribute to a high level of capital growth, and then to locate and analyse several properties that meet these factors to ensure that you are stacking all of the chips in your favor.