Buying the right place in the right location
Choosing the right location to buy your investment property is one of the overriding factors in the potential success you will have in relation to financial gains. Buying property in a less desirable location may be cheaper, however you may find it difficult to attract tenants.
Likewise, the type of property you buy needs to be appropriate for the demographic of the area you are buying in. You need to consider whether you are catering to an aging population, young couple with no kids, families etc.
Some factors you should consider are:
The proximity of your property to desirable amenities such as good schools, public transport, shopping precincts, parks/reserves/sporting facilities, cafes and restaurants, medical centres and road links. Whilst a potential tenant may not use each of these amenities, they will at least have the choice.
Inner city living remains popular and properties within 10kms of the city are traditionally highly sought after. These areas may attract higher rental income, however property prices will be more expensive than those further away from the CBD. Do your research on suburbs further out as they may provide you with a higher return on investment.
When considering an investment property in a regional area choose one that offers a diverse range of employment within a reasonable proximity. Do not rely on one sole industry to bring tenants to your property; this is fine whilst that industry is doing well however if it declines, this may decrease the value and/or the likelihood of finding a range of suitable tenants.
Look at areas that are growing in population as traditionally this means they may attract additional government funding to develop surrounding infrastructure, which in turn increases the popularity of the area. If you’re purchasing in a growth corridor where there are lots of new houses it may take longer for your property to increase in value as the cost of building a new home in the same area will be an attractive proposition for some. As vacant land decreases, existing homes will start to appreciate in value but this may take time.
Consider demographics of the area when purchasing an investment property. If buying in an area popular with seniors or downsizers, you should avoid properties with stairs or uneven outdoor spaces. Families are likely to rent homes with multiple living spaces and plenty of bedrooms and young childless couples might prefer a small yard, courtyard or patio with minimal outdoor maintenance.
Resale is another factor to consider. Be aware of the amount of time properties are normally on the market as this may place pressure should you be in a position where you need to sell quickly and the area has high days on market.
Leave emotion out of your decision. It’s irrelevant if you would or wouldn’t live in a particular suburb. People rent in different areas for different reasons so do your research and formulate a solid strategy prior to making a purchase.
Research holds the key to successful investment. There are a number of websites that have been set up to ensure consumers can access both current and historical sales data. This allows you to grasp the recent performance of the area and also the history of growth.
Some of the most popular and comprehensive sites include:
reiv.com.au (or the local real estate institute within the state you are researching)
Looking for the right property?
If you are looking for the right property, Carmel Home's full service project management may be the right option for you. We are one of the leading custom home builders in Melbourne and are experts in creating bespoke designs for unique properties. We also offer a free consultation service and can help you bring your dream home to life.