How do I determine if the house I’m planning to purchase will increase in value within the next 5 years or so?
The rule of thumb in real estate investing is location, location, location. If the neighborhood or community where you plan to invest has the potentials to grow and improve through the years, then, that is an indication of value appreciation for all the surrounding properties in that particular area. You cannot expect to get the best yields from a neighborhood on the decline.
It pays to do your own investigation as to the conditions of the community/neighborhood you prospect to be part of. Check on how the local government has paid attention to the improvement of roads and basic facilities. The development of new infrastructure and other growth drivers such as schools, shopping malls, public transport systems, and other facilities are good indicators of property value appreciation.
The track record of the property developer is also important. Have they timely delivered their promises and continue to assists their investors even after the sale? Have they been consistent with the upkeep and maintenance of the common areas? Is the neighborhood safe and secured? These are some important aspects that will give you some optimistic clues to the future.
Observe if there has been a steady growth in the local population that could lead to increased demand for homes or commercial establishments. To quote General Douglas MacArthur’s real estate strategy, “In real estate investing, look where people are going. Get there first and buy land.”