How to select a best location for an investment property?
The timing of property investment is receiving a lot of attention in the media. Although the focus is on entering the market at the right time, this can be a difficult and risky task. A lucky few will always pick the peaks and troughs in an investment market. However, due to the high cost of transactions in the property market, doing so can erode much of your gain. Property is a long-term investment in which location is often more important than timing. We won’t give you advice on where to invest in Australia; locations and properties will differ depending on people’s individual circumstances. Instead, we’ll look at the factors to consider when deciding the location of an investment property.
Is the neighborhood economically diverse?
Understanding the local economy’s diversity is critical when determining the best locations for investment property. Avoid cities and towns that are reliant on a single industry, such as mining towns. Employment is a key driver of a property market. If one company or industry provides most jobs in an area and suffers a setback, your property investment will suffer. It becomes more difficult to find tenants, rents begin to fall, and you will most likely struggle to sell the property.
What is the proximity to employment?
Continuing from the previous point, your property must be close to employment. Although Covid has accelerated the trend of working from home, many people still prefer to live as close to their workplace as possible while keeping costs and lifestyle in mind. When the local economy grows, more jobs are created and more people move in, increasing demand for real estate.
How convenient are the transportation options?
Knowing the local traffic bottlenecks and proximity to public transportation will help you determine a property’s livelihoods. A property with a 30-minute line of traffic out the front door will turn off potential tenants. Consider the distance to public transportation and whether your tenant will feel safe walking there at night. Discover what future road, transportation, and infrastructure developments are in the works.
What are the current and proposed levels of housing supply?
Supply and demand drive the real estate market. In some areas, the population can support many dwellings. However, there will come a time when an area’s excess supply will drive down demand for real estate. If you buy a house next to thousands of undeveloped acres, there is a good chance that land will be carved up and developed. Similarly, you don’t want an apartment next to a 220-unit building with another 180 units proposed across the street. Examine state and local urban planning policies to see what is planned for the areas of interest.
Are you buying the right property for the location?
When deciding on the best location for an investment property, consider the property type. There is a lot of discussion about houses versus units. A unit is likely to be better for you if you’re buying close to the city, looking for a lifestyle, or looking for an affordable yield. If you want to live outside of the city, a house is probably a better option. Either will work, but it’s a matter of finding the right property in the right location for your specific strategy. A high-quality one-bedroom unit near the CBD with water views is likely to sell quickly. A small one-bedroom unit 45 kilometers from the CBD, on the other hand, is a less sound strategy.
Are you purchasing for the long haul?
There is a lot of information in the media about what is going on in the real estate market at any given time. However, the media speculates less frequently about what is likely to happen in the long run because it is less interesting. Property is a long-term investment that you will most likely keep for at least ten years. Consider the recommendations above to get a sense of the long-term trends for what you’re looking to buy. Suburbs change over time, and the economy fluctuates. You must find a property that can withstand these changes. A long-term desirable location is ideal for an investment property.
What amenities are available?
You’re more likely to attract tenants if they can live a great lifestyle by being close to their favorite cafes. The proximity of grocery stores, gyms, cafes, restaurants, and parks improves rentability significantly. You may also want to consider what schools are nearby, depending on the type of property.
