When you’re looking at property investments, you’re also looking at a large range of choices and financial commitments. The truth is that you’re also looking at the options for the future of your investments after you’ve made the financial commitment. It’s important to know how to compare one investment property correctly with another and know how to select the best option. There are some quite simple ways of doing this.

We’ve got a few tips to help you compare your options:

1.Setting your standards for investment properties

The real issues in comparing properties aren’t actually the properties- They’re your financial goals. The question is which property can bestdeliver for you. To help clarify your choices, you need to set some very clear goals and quality standards:

For example:

•You want a good quality residential property for your investment.
•You want good rental income.
•You want to be sure of good capital gain.
•You want the option to upgrade and add value to the property.
•You want to minimize risk and outlays.
These are core objectives. They relate directly to future values.

2.Financial issues related to purchase

The fact is that no two properties are the same in terms of cost when you buy them. One property might need no more than a coat of paint. The other may need to be practically rebuilt to be inhabitable.

You need to define:

•The condition of the building- This requires a professional inspection and detailed report. Ask your lawyer to check approvals to ensure there’s been no illegal building, too.

•Anticipated costs of maintenance, renovation or extensions- Costing must be realistic, and slightly above current costs to allow for budget stretching.

•Site factors- All sites are different, too. Some are real assets, some are major liabilities. You must research any site issues thoroughly. (It’s a good idea to go with a professional builder for a property inspection.)

•Title issues- Your lawyer should be told to do a truly thorough job of title inspection. Title issues can be ultra- expensive.

3.Return on investment

This is the real investment territory. If you’ve seen that statement in financial ads, “Past performance is no guarantee of future returns”, that’s a very good way to approach property investment. Local markets can vary a lot and market moves can also interfere with investment returns.

Issues to consider:

Real property values in the area, meaning actual sales values. You need to look at types of property by which you can calculate the real market value of your investment.

Rental prices in the area. These can be a very large bandwidth, so you should again check your investment against similar properties.

4.The cost of holding and maintaining the property

This is an issue most investors overlook until they’re paying for their costs. You must check out in depth the real cost of your investment before making any financial commitment.

5.Risk management

All forms of investment carry risks. In the case of property investment, you need to look at things like insurance, financial risks to your other assets, and any other possible liabilities.

(Important Note:One very good way of avoiding all forms of risk is to buy your investment property off the plan. If you’re comparing properties, it’s a good idea to use these criteria as a basis for comparing mainstream market investments with rock solid off the plan investments. Expect to be very surprised by the comparison.)

Make your comparisons, and you can make the right decisions for your investment.