To make sure you enjoy long-term capital growth, you need to find the best possible location for your investment property. But amid all the advice being flung at you from Real Estate agents, family and friends, as well as your own prejudices to certain areas, how can you tell if an area’s investment potential is going to be good enough? Check out these 10 tips.
Set a Budget
Your budget is what’s really going to dictate where you can afford to invest. Set your budget by meeting with a mortgage broker or lender and try to get a pre-approval. You need to know your budget before you set out to look for a property.
Sifting through the options
Once you’ve set your budget, start narrowing down the suburbs where you’d like to buy a property and that’s within your price range. There's a lot of sales datat available for you online now but you can save time by calling agents in that area and finding out what they have available in that suburb and in your price range. Let them know what you’re looking for and find out if any nearby suburbs will have the sort of properties you’d like and can afford.
Map out the suburb
Many suburbs have preferred pockets. To really get a hang of the suburb you’re interested in, take a map to the local Real Estate agent and ask them to highlight the different pockets from most popular to least popular. Over time the less sought after pockets will grow in popularity as the now-popular pockets rise in price rapidly. So if you can get into a better pocket right from the beginning, you can enjoy greater capital growth.
Exploring surrounding areas
Surrounding areas also offer good options for investors. If you start off in your preferred suburb and can’t find what you’re looking for or can afford, move to either side of that area to find one that will fit in with your budget and likes.
Infrastructure does drive property prices and experienced investors will follow infrastructure trends. Take a look at where the government is upgrading infrastructure which is a sure fire sign of up and coming hot spots.
Isolate certain lifestyle attractions
Buyers and tenants tend to favour areas that offer lifestyle attractions like shopping centres; walking tracks; beaches; public transport; creeks and good schools. The more people your location appeals to, the better chance you have of leasing or selling at a premium.
Water and City views
Many tenants tend to enjoy good views of the city or water. The gap between non-beachside and beachside properties is increasing each year as it is, which makes it more and more unaffordable for new homebuyers to get into that market.
Hang out where the locals do
If you’re researching a new area, drive around and see where the locals hang out. Check out the area’s most popular spots; café’s, shopping strips and supermarkets will give you a great sense of what the atmosphere is like in the area and what the demographic of the suburb is.
Transport is crucial
Whether you choose a property in an outer area or the inner city, transport plays a big role. The more options available in the area, the more valuable that suburb is going to become. Access to major roads and freeways is also a big advantage as the easier it is to get into the CBD or other big employment hubs, the better the suburb for tenants and buyers.
Ignore the negative people
There are plenty of areas that locals might try to put you off buying in. But a fresh set of eyes that don’t know the area and its stigmas can work well as you’re looking at that area based on fundamental merits that make the area more valuable. Stigmas dwindle in time and you’ll be happy to have invested in an area while it was still affordable.