Property investment is often viewed as something you simply hold onto as an equity-building asset. But what if that asset is not really growing in value? Does it really make sense to retain it without ever really seeing any true rewards? Here we look at the importance of investing well and avoiding those dud purchases that reap little growth.

The Difference Between Intelligent Investing and Wasted Investment

When you choose to invest in property, regardless of your timeline, you want to grow equity. This is not so much a goal, as it is a given with real estate investors. But is this really how property investment works? Is it really a matter of just buying a property that seems like a great deal and waiting for it to rise in value? The simple answer is no. There is far more to investing than that. Intelligent investing considers all of the things that will either offer organic price growth, engineered price growth through development, or in the best-case scenario, both.

Your goal is to find properties that have a higher return on investment that are growing exponentially due to their location. This is what we call organic growth. Whether you hold the property for years or want to see growth sooner, organic growth is key, which means location is your most important consideration. A wasted investment is a dud purchase that sees little performance while holding up cash you could invest in a higher-performing property. 

How Do You Make Smart Investments?

Smart investments look at ideal locations based on three key elements for success:

1. Demand: Is the area in demand or on its way up?
2. Supply: Is the area more likely to be overdeveloped with tons of housing options due to available land, or is it limited for development opportunities?
3. Demographics: Who lives in the area, what is their income, and what is the opportunities their wealth or lack of it present in the area?

Intelligent investors build quality property assets, with substantial equity holding, in a desirable location to enjoy long-term compounding capital and rental growth.

How Do You Know You Have a Dud?

Because you won’t see growth, or you won’t be generating income. As mentioned above, you need to know your investment is a quality asset that is seeing substantial, notable growth. We are talking about numbers here, so your equity is measurable. If you look at what you paid for your property and what its current value is now, and you aren’t jumping for joy, chances are something is not working for you.

If you are holding a property in the hopes of compounding capital, and it isn’t delivering growth, you should reconsider. This is an important consideration when it comes time to decide if now is the time to offload that property. The sooner you sell it, the more time you have to start building equity in an intelligent investment. However,  you still want to see above-average growth. For example, if your goal was to develop the property and you are waiting for the right time, if your property hasn’t been compounding capital year over year, then your investment in developing that land won’t be enough to allow you to fund your development costs. Simply put, if a property is not delivering strong growth or income, then it should go! It’s time to assess your property, determine its value and work with EQ Property to get it sold.