How to find your investment niche in real estate? Speak with experts and other investors, read market reports and look at comparable transactions. Let your curiosity run wild and follow through with your intuition.
1. Which market excites you?
Be precise about and stick to what you’re looking for. For example, a “residential property in London” would return a wider search result than “2-bedroom luxury apartments in Prime Central London”, which is more precise and actionable. Knowing your exact target market will narrow down your search with more effective sourcing of information and experts.
2. What is the investment for?
A lot of investors tend to make the mistake of thinking that good property should be held forever. If your intention of the investment is capital growth, at what point would you be satisfied with a return (or loss)? Is the investment for rental income or self-use? Being crystal clear on your intention will help you realize your investment strategy and manage your expectations.
3. What is the demand and supply of this niche?
Understanding your target market’s cycle will give you a better idea of picking out signs of recovery after a fluctuation in performance and any potential for future growth in the area. Being or having someone on the ground will help you gather feedback from experts and gain an updated feel of the neighbourhood’s development.
4. Where do you find potential projects from your niche market?
Don’t put all your eggs in one basket. Try working with multiple real estate agents or brokers that specialize in your niche market. You can start by asking their opinions on comparable properties and understanding which opportunities would fit your investment criteria. If you do not know any real estate agents or brokers, you can ask this question on Denzity’s forum to gather suggestions from experts.
5. Are you aware of all the potential risks?
When you’ve made an investment in your target market, you should understand the elements which might have a drag on your investment’s performance. What are the elements which will influence your investment? We suggest making a discounted cash flow with a base case, stress case and worst case to predict the potential risks that might affect your investment.
If you are clear on these details, you can find the property of your dreams without wasting precious time and effort. You might also become an expert of the market!
Do you have other tips for finding your real estate niche? Share with us in the comments below.