With so many properties in the market to choose from, many investors are spoilt for choice.
How do you choose the right property to invest in?

Investors, like you, look at the Return on Investment (ROI) to determine if a property is worth investing in. What a property is worth is still reliant on the demand and supply curve.

For investors who are buying to rent out while biding time for property prices to climb, do your sums well before committing to a property. For a start, you'll need to determine the ROI, the demand for rental in your district and how much monthly rental your property can fetch.

So, let's look at how we determine the ROI in the property market:

First, we determine the purchase price of the property.
Suppose the apartment costs $500,000 and can be rented out for $2,000 a month, or $24,000 a year.

Your ideal ROI would make out to be 4.8% (24,000/500,000). However, this is the ideal value, not the true market value. What you can expect would be something less than that. We'll need to factor in the taxes, maintenance costs and other expenses associated with maintaining an apartment. Therefore, your ROI could drop to just 4% or less.

If you are satisfied with your ROI, check out the demand for your type of property in the district. You can check the rental of similar properties and who are the people renting them. A studio apartment near a university could command a higher rental than a big bungalow off city. Family sizes are gradually decreasing in size and big bungalows could be of lower demand in some countries. Always check the demand before committing to a property investment. If you are unable to rent it out, or at a less than expected price, you could stand to lose in the long run.

Always spend some time to research on a suitable property before a purchase.