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Investors are watching these 6 signals to beat the market before everyone else
If you’re currently renting, it’s possible that you’re paying more per month than it would cost you to own a comparable starter home. Even worse: Every dollar that you pay in rent builds your landlord’s wealth, but does nothing to increase your own. As rental costs continue to rise, property investment and ownership are becoming increasingly lucrative.
Property values are influenced by readily predictable external factors, making the investment guessing game a bit more straightforward. If you’re looking to join the industry as an investor rather than fund it as a renter, you’ve come to the right place. PropertyReach shares the key signifiers of a market boom to help you jump-start your property investment journey.
What Does it Mean to “Beat the Market”?
In short, “beating the market” means buying before demand drives prices higher. Savvy property investors keep their eye on areas where trends are likely to shift, and then make calculated purchases based on those trends.
If you’re currently renting, aligning your future goals with your current budget is the best place to start your property investment journey. Curious whether you could own for less than you’re renting? A property search tool can help you identify markets where monthly rent now exceeds the equivalent mortgage payment on comparable properties.
6 Early Signals to Keep an Eye Out For
You’ve identified that home-ownership is a real possibility for you, but now what? Navigating the volatility and uncertainty of the property investment industry can be overwhelming, but knowing which resources you can rely on can make it much easier. The following list was compiled using a combination of Redfin and PropertyReach data.
3 Key Indicators of Areas Worth Investing In
Before you purchase a property, you have to identify an area that’s worth the investment. Here are a few key indicators that property investors look for before they begin identifying specific properties.
1. Population growth
Savvy property investors keep an eye on net migration into or out of an area. An influx of people into an area increases the number of potential renters, making it a lucrative investment opportunity. This is a great sign for renters looking for their forever homes, too; an influx of people means an uptick in overall property value.
2. Job growth and diversification
An increase in employment opportunities in an area is an indicator of new industry hubs, which can be a surefire sign of lucrative investment opportunities. Think about it this way: An area that provides its residents with a wide array of job opportunities is one that not only retains residents, but also attracts them. Savvy property investors look at the trajectory of job growth before investing in an area, and home-buyers should, too.
3. Infrastructural changes
Areas with investor-friendly infrastructural changes (city zoning, tax incentives, public-private partnerships) are prime targets for investors. Beating the boom means keeping a watchful eye on these infrastructural changes and pouncing on opportunities before your competitors do. In many cases, these competitors include home-buyers. Keeping up to date on upcoming infrastructural changes is the best way to ensure that you purchase a property at the optimal time.
The 3 Key Features of Properties Worth Purchasing
Once you’ve determined which area you should invest in, it’s time to start narrowing down your property options. Here are a few traits that ideal investment properties share. Though a similar logic can be applied to those who are looking to purchase their first home, many of these features are investor-specific. If you’re a renter who is hoping to try your hand at investment properties, look closely at these three factors.
1. The property’s mortgage is already paid off
When you’re investing to earn a profit, there are few things worse than being bogged down with a monthly payment. Purchasing a property that has a paid-off mortgage maximizes your cash flow (all rent that you collect becomes profit), reduces your financial risk (such as the threat of foreclosure), and allows you to build equity.
2. Senior owner
Property investors often prefer to do business with senior homeowners because they typically hold substantial untapped home equity. This demographic also typically lives in “value-add properties,” or properties that can be remodeled and then resold for a high profit. Ultimately, purchasing homes from older homeowners can offer a range of benefits.
3. High estimated equity
A high estimated equity can serve as a stepping stone to maximizing and accelerating wealth. Investors can use existing equity to build more wealth without using their own resources. An investor can, for instance, refinance an existing mortgage to use as a down payment on additional properties. Homes with high estimated equity are incredibly lucrative for investors, and equity is something investors closely consider before purchasing a home.
Start Building Your Wealth with Property Investments
Whether you’re a renter looking to make the leap into homeownership or an amateur property investor, understanding these six signals can help you “beat the boom” and ensure that your investment is worthwhile. Property ownership means investing in your future, and focusing on these indicators can help you do so securely and strategically.
This story was produced by PropertyReach and reviewed and distributed by Stacker.
