Where to invest in property
Where to invest in property
If you are wondering where to Invest in Property, here’s some key things to consider.
There are a number of key areas to consider that have a number of growth indicators. Things we generally look at are locations with a strong demographic, good incomes, strong rental demand. Also a low percentage of other rental properties in the area to reduce competition from other landlords.
Factors to consider are . These include quality local amenities, entertainment precincts, employment hubs and quality transport corridors. Having better access employment and lifestyle amenities is a good thing.
So to make your decision easier, we have listed 7 Red Flags for where to invest in property. Or should we say, where NOT to invest!
Look out for these 7 red flags as you research, and you’ll be set on your way to finding the perfect investment property.
1. DON’T INVEST IN Single Industry TOWNS
A single industry town or location is a place where residential properties have been built surrounding a particular industry, such as mining or defence. This kind of location is best to avoid due to the high-risk involved.
For example, if the mine shuts down, or the defence force moves their personnel to another base, the rental demand surrounding the area will drop, driving both rent and property prices down.
2. DON’T INVEST IN Dodgy Neighbourhoods
Despite cheaper prices, investing anywhere with a reputation for being a “bad neighbourhood” is not a great investment strategy. Capital growth in these suburbs is generally less than other areas. Demand is often lower due to fewer people wanting to live there.
Finding long-term, good quality tenants who can afford the rent and will respect the property can also be more difficult. This may cause the property to remain unoccupied for longer periods of time. This means less rental yield back in your pocket.
3. DON’T INVEST IN Aesthetically Displeasing AREAS
Your tenants, and what they expect from the area they live in, should be at the forefront of your decision making.
A pleasant look and feel of the location are huge drawcards for good tenants. Having amenities, schools and activities nearby will also be appealing to renters and assist with your long-term prospects for capital growth.
4. avoid Suburbs with a Large Percentage of Rental Properties
Another aspect to investigate is the percentage of rental properties in the suburb you are considering investing in. Some suburbs can have a percentage of rental properties upwards of 60% of the total property market.
This means you will be competing against a larger number of landlords for a set amount of tenants. You may then need to lower rent get an edge on the competition, which is not ideal. Subsequently, this could lead to lower rent prices across the entire suburb.
Renters also tend to not care for their houses as well as homeowners do. The result can be unkempt properties, a diminished streetscape and lower overall desirability of the suburb.
5. where to invest in property – DON’T INVEST IN Small Towns
It goes without saying that if there is no-one to rent your investment property, then there will be no rental yield coming in for you!
The larger the population in an area, the bigger the rental pool (the amount of people that could move into your property) will be. As well as making for a better resale market should you need to sell the property.
A good rule of thumb is to look for an area with a population of at least 100,000 people within a 20km radius. Or towns that have the right indicators or strategy to grow to this size.
6. DON’T INVEST IN Areas with Outdated Infrastructure
Areas with substandard public transport, outdated airports and roads, low-quality internet and utilities, or lack of satisfactory schooling and medical facilities will not be appealing to tenants.
Before choosing where to invest, it’s worth doing some research into nearby future developments to get an idea of how the area will improve over time.
In addition, localised issues such as large, outdated overhead power lines can cause health issues for your tenant. Subsequently, this can change the way in which your bank views the property valuation, meaning you may not get the loan you were after.
7. where to invest in property – avoid Mainstream Hotspots
You might find some “insider information” on social media or in a property investment publication. It is usually stating that a particular area is a “hotspot” for investors. This is usually where the uneducated crowd invest!
However, often by the time this information reaches the general public, the area’s property clock has neared its peak and prices are about to plateau.
To avoid this, we recommend looking for more niche locations that are not yet mainstream, and distinguishing the factors that will mean they become a hotspot in the future. Such as major employment zones or large transport corridors being created.
People like to live close to where they work, so these aspects increase demand, which in turn drives rental yield and property values up.
Help on where to invest in property
As you search for where to invest, it is recommended to get in touch with a Qualified Property Investment Advisory (QPIA). Accordingly QPIA can talk to you about fully researched properties and locations around Australia. A QPIA definitely knows where to invest!
Prospa Property Advisory, for example, has QPIAs and are accredited members of the ASPIRE Property Network – https://www.aspirenetwork.com.au. We work with property investors Australia-wide and our analysts constantly search for up-and-coming locations. Subsequently, we know where to invest and save you a lot of hard work!
If you’d like to speak to a professional property investment advisor about the best locations for you to invest in, then give us a call on 1300660335 or email hello@prospaproperty.com.au.
For more on this topic, take a look at the following article:
Predictions for the Australian Property Market: 2021 and Beyond
