Strip out the hype
The financial headlines often suggest a property market about to fall out of bed or a property market moving into overbought territory. However, the simple fact is that in order to make any money you need to strip out the hype and get back to basics. So what do you need to look at?
Many people take a top-down approach to investment which means that they look at the widest investment arena first of all to see if there are any potential shocks on the horizon. Whether we like it or not, if the US economy coughs then it is likely the rest of the world will catch a cold. As we saw in 2008, the collapse of the US mortgage market led to one of the sharpest economic downturns in living history which affected all markets around the world.
The next area to look at is an individual country economy and what the prospects are for the short, medium and longer term. As we have said time and time again, the most successful property investors do look long-term and often take advantage of short-term situations to grab a bargain. If the outlook for a particular country economy is encouraging then this is obviously another box to tick.
You can read all of the headlines, you can read all of the articles and you can scour the Internet for comments and opinions but nothing beats information on the ground about a local economy. If you take a step back, take out the emotion about a particular local area what is your honest opinion about the short, medium and long-term prospects?
There may be situations where a country economy is looking a little fragile in the short to medium term but a local economy is perhaps very strong. You would need to take into account any impact upon the risk/reward ratio if the country economy was struggling but there have been instances where hotspots have emerged even during troubled times.
Type of properties in vogue
It is all good and well spotting a country which is doing well, finding a local economy with great prospects but if you choose the wrong type of property or the wrong sector all of this good work could come to nothing. Are people buying flats? Are they buying semi-detached properties? What kind of price level is proving more popular?
If you’re able to find a situation where the world economy is steady, a specific country economy has good prospects and a particular area of that country is doing well, then you may be onto something. This may seem like a very cold hearted and calculated way of finding your next potential property investment but that is exactly what you need, cold hard facts and a decision with no emotional bias.