Investing in property is one of the most reliable ways to build long-term wealth, but not all properties offer the same return on investment. Identifying the right property requires careful evaluation of several key factors that determine its profitability and growth potential.
Antonie Goosen, principal and founder of Meridian Realty, explains that location remains the most critical factor in property investment. “A well-located property will always have demand, whether for buyers or tenants. Areas with strong economic activity, good schools, and accessible transport links tend to perform better in terms of value appreciation and rental income,” he says.
Beyond location, market trends play a crucial role in determining whether a property is a good investment. Investors should analyse supply and demand in the area, looking at vacancy rates, property price growth, and rental yields. “A property in an area with oversupply or declining demand may struggle to generate returns,” Goosen warns.
The condition of the property is another vital consideration. While fixer-uppers can offer good returns if renovated wisely, structural issues or high maintenance costs can quickly eat into profits. Investors should conduct thorough inspections and assess the long-term maintenance requirements before purchasing.
Cash flow potential is also key. A good investment property should generate consistent rental income that covers expenses, including bond repayments, levies, rates, and maintenance. “Many first-time investors make the mistake of focusing only on property appreciation without considering whether they can afford to hold onto the property long enough to benefit from it,” Goosen advises.
Future development in the area can also impact a property’s value. Infrastructure projects, new commercial developments, or planned transport upgrades often drive up demand and property prices. Conversely, negative factors like rising crime rates or neglected municipal services can have the opposite effect.
A property’s potential for capital appreciation is what ultimately makes it a solid investment. “Investors should think long-term and focus on properties in growing areas with strong fundamentals,” says Goosen. “With thorough research and a strategic approach, property investment can offer financial security and wealth creation over time.”
