Choosing The Right Investment Property

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Selecting the right investment properties is fundamental to your success. If you choose the right property, you can be almost assured that you will enjoy good capital growth for many years, and that the property will rarely – if ever – be vacant, which will practically guarantee your property investment success.

For this reason, our P3 Investment Group members use the 10-point P3 Scorecard to evaluate each potential investment property before making an investment decision. Among these crucial factors are ownership control and the bank’s opinion of the investment.

P3’s 10 Scorecard variables

  1. Price
  2. Rental income
  3. Break-even
  4. Condition of the property
  5. Vacancy
  6. Area
  7. Levies and taxes
  8. Affordability
  9. Control
  10. Bank valuation


Ownership Control

While acquiring a full title investment property provides the investor with full control of the property to subdivide, extend, renovate and remodel to improve its rental, there are several benefits to property investors when purchasing a unit in a well-managed sectional title development. For example, the cost of maintenance of amenities and the common areas of the development is shared by all the owners via a levy, often making it more affordable than carrying the full responsibility and costs of maintaining a full title property. Furthermore, many tenants prefer the safety of a sectional title complex, as well as the common amenities, such as a swimming pool, which they can enjoy but are not responsible for maintaining.

Bank valuation

Professional property investors appreciate the fact that the banks’ strict valuation and lending criteria afford them additional protection against a poor investment decision that could place their entire property investment business at risk. In complying with the banks’ stringent criteria in terms of the valuation of the property, its affordability and acceptable security, P3 investors ensure that their cash flow can indeed support the repayment of the loan and that the value of the property – as the security for the loan – will in fact cover the outstanding loan should they default or sell.

Don’t miss the next article in which we will look at the easiest way to ensure you select the right investment property every time.

Visit: P3 Investment Group

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