Location, location, location. You’ve heard it before, and for a good reason.
Think about this – if you were buying a house to live in, you’d think long and hard about the perfect spot to suit your needs at the time. So why do so many Australians act differently when it comes to investing? Too many of us simply flock to ‘hot-spots’ without putting real thought into where they’re buying.
When looking for the ideal location for your first (or next) investment property, these five key considerations should help you narrow your search.
Where you're at
Firstly, take a look inwards. What are your investment property goals? What do you hope to achieve with this property? How do you plan to achieve this? Once you have these answers, try to map out a time-frame, and a figure you’ll need to reach your goals. Make sure you consider cash-flow and capital growth, and whether you’re hoping for short-term or long-term gains. Key to this will be your financial situation and borrowing power as well. If you find any of these questions hard to answer, there’s no shame in reaching out for some expert advice from a trusted lender or financial planner.
Put your tenant hat on
For any locations you’re weighing up, be sure to consider your demographic. If your market is predominantly young families, you’ll be after a property with large, clean bedrooms and bathrooms, away from main roads, with easy parking access and in close proximity to schools and shops. If you’re looking in an urban area dominated by young professionals, kitchen and parking aren’t as important as distance to public transport, restaurants and cafes. Just remember – the more attractive to tenants your property is, the steadier your income stream is likely to be. Localise your knowledge and ‘fish where the fish are’.
All about those gains
If you’re umming and ahhing, a good bet is to consider areas within a reasonable distance of factors that will increase property value, like leisure facilities, beaches schools, new industry and development. These things will generally guarantee decent tenancy rates, as well as re-sale value. It can also help to look out for properties within the median suburb price-range – these types of properties are usually easier to sell in a pinch.
Don't be scared of 'Blue-Chip' properties
Looking to pick up an investment property at a bargain price is not a crime, but remember – if a property’s price is in the basement, it may be a sign no-one wants it for a reason. Blue chip properties are those that will perform well under any market conditions, in suburbs that are always in demand. Even if it means paying in market value and paying a little bit more, properties in these areas represent a pretty safe bet, and are great when it comes to the ‘sleep at night’ factor, which is important in the life of any investor.
Do your research
There’s power in numbers, and we’re in the information age! Many online real estate organisations offer regular property sales reports, which show key stats such as suburb growth, and they provide annual and 10-year comparisons. Another great idea is to access the QuickStats tool to give you demographic breakdown for any and all of the suburbs you’re considering. Check it out here.
At The Greater, we’ve been helping Australians reach their property goals for over 70 years, so we like to think we’re the experts.
To see how we can put the keys to your next investment property in your pocket, start a conversation with a Greater lender today here, or make a free initial appointment to speak with a Financial Planning specialist here.
If you found this blog helpful, why not connect with The Greater on Social Media for regular financial hints and tips?