Before you rush out and buy that gorgeous house - the best house in the street - for your investment property, stop! Is it really the best house for an investment? While it may be attractive to many purchasers, experts tell us that it is usually the worst house in the street that makes the best investment.
That is not to say it should be a tumbledown eyesore that needs extensive renovations. That sort of house is only a good investment for those who are willing and able to do their own renovations. Even then, unless it is structurally sound, you would be best advised to keep away from it. The worst house on the street really means that it is the most modest, or at least a good fit with all the others that are there. Why?
Capital growth is the answer. If you buy a house that outshines every other one on the block, then it will be a great deal more expensive. And so when the price goes up over several years, that particular house will not increase in value nearly as much as the others and your profit margin will be slimmer. Therefore, to take advantage of capital growth, you need to buy a house that is in keeping with, or slightly under the value of those nearby. That way you will stand to make the most profit. The value of the land itself is more important than the value of the house.
