There are numerous factors that contribute to achieving above average capital appreciation when investing in property. To begin with, when deciding on a location to invest, you should select an area with a growing population. This will ensure demand for rental properties in that locality, and hence put future pressure on both price growth and rental growth.
To ensure further demand for your rental home, it is wise to ensure that you don't invest in something at either the bottom or top end of the market. In reality, your best choice is to select a middle-range rental home that will be affordable to the majority of people, more specifically, the middle-classes. Millionaire property investor Hans Jakobi follows this philosophy. High end real estate is too susceptible to recessions. During the good times, high end properties can do very well, but boom times don't last forever, and high end real estate is the first to tumble at the start of a recession.
Similarly, low-end properties can under perform the market in terms of capital appreciation because the localities in which they are situated tend to be less desirable. Further, the type of tenant you are likely to draw with low-end real estate could prove to be a more high maintenance type of tenant, with a higher likelihood to default on their rent and a higher chance of taking less good care of your rental home compared to a middle class renter.
The following linked article on selecting the right investment property covers many other factors that form the recipe of successful investment real estate selection. There are also numerous Property investment training courses in the Success University member's area from renowed experts such as Loral Langemeier, Claude Diamond, Robert Allen, and William Bronchick. You can obtain a 14 Trial access to Success University for only $2 to check them out.
It is also essential to analyse the numbers relating to your prospective property investments just as you would do with stocks. You need to compare price-earnings ratios; compound interest; internal rate of return; gross versus net yields, and before and after tax cashflow.
There are many software programs out there that can perform this function. One of the leading Australian programs is called the POSH Property Program. It allows you to analyse and contrast multiple prospective purchases against one another with a comprehensive Inspection Check List which you can print out and take with you when viewing prospective properties. In conclusion, it is not only important but also extremely worthwhile to take the time to educate oneself about property investing before diving in to your first, or next, investment. It is worthwhile to fully grasp the factors that will contribute to a high level of capital appreciation, and then to find and analyse several properties that meet these factors to ensure that you are stacking all of the chips in your favour.