If you are looking to buy a property in Australia, what’s the most important factor in determining property value? Say it with me now ‘Location, Location, Location’. Choosing the right location to buy an investment property is very important. Location is not simply distance from schools or the shops, but the socioeconomics of the suburb and the profile of surrounding houses, streets & communities.
So what should an investor look for when it
comes to finding the best place to buy investment property?...
Think about the regions which you think are the best place to buy investment property .
There are thousands of locations in Australia you could choose to invest in,
the question you must ask yourself is: 'Do you want to buy somewhere
close to where you currently live or are you happy buying far away?' Many
will choose to buy close to where they live, however more
adventurous investors will be willing to invest in property located in
another part of their state or country. The decision is a balancing of anxiety
with opportunity; the anxiety of owning a house you will likely never see vs
the increased number of locations you can invest in. You should consider whether
distance will be a factor in your decision?
Tip #1 Your tolerance to distance determines the number of investment opportunities available to you.
Ask yourself whether you want to buy in either a city/metropolitan area, suburban area or rural area. Properties located in the city will almost always be more expensive, than those in the suburb. Suburbs can offer you moderately priced properties, with the potential for growth. Rural properties might be the cheapest of all options but present difficulties when trying to find a tenant and a less likely to grow as much in value.
Tip #2 City/metropolitan properties are usually high value/low growth investments. Suburban properties are usually moderate value / low – high growth investments. Rural properties are usually low value/low growth investments.
The area your investment property is located, can affect the type of tenant your property will attract & the length of tenancy. As an example, If you buy in the inner city, you could get a young, professional couple as a tenant or your tenants could be a group of university students. Regardless of whether you prefer the former or the latter, understand that the area you buy in, can have an impact on who will be applying to rent your investment property & how long they intend to remain tenants.
Tip #3 Where you buy an investment property will determine the type of tenants you get & how long they may stay as tenants
Ensure that you look into the current and expected demand of a suburb/region; as well as the supply of available properties. A region may have had a really great growth rate over the last 3 years; but if the region is starting to lose its supply of tenants, then it could indicate that the growth might be about to plateau and it may not be the best place to buy an investment property. The supply of available rental properties in a region will impact your rental yields. Tenants in regions with a high supply of rental properties, have the luxury of choosing a rental home from multiple properties; increasing their bargaining power and lowering the weekly/fortnightly rent of properties in region.
Tip #4 Investigate a region’s current supply of rental properties vs. demand for tenancy; as it will affect property value & rental yields.
Factoring in all of the above, it’s time to look at the financial information. Do some research into the region you are looking to buy and pay close attention to the specific suburbs/locations you a thinking of choosing to buy an investment property in. Find out crucial information like: average property value, growth rate, future developments for the region (future train lines, NBN roll out, business development projects, planning for new estates, etc.) and other important considerations.
Tip #5 Research the regions you are planning to buy in; focusing on important information like growth rate, future developments, etc.
Now you have your suburbs narrowed down, it is time to
start looking at the property investment options available to you. Take into
consideration your property options and their proximity to local facilities
like transport options (e.g. Bus stops or Train stations) and shopping centres;
as these can increase the value of your property. Consider speaking to a
mortgage broker or real estate agent about where the best place to buy investment property locally.
Tip #6 Local facilities like
transport options and shopping centres can increase the value of a property
Tip #7 Seek advice from local real estate agents and mortgage brokers
Finding the right place to buy a new investment property is a mixture of science and art, but if you use available resources and speak to experts; you can tip the odds in your favour. Good luck!
Need a home loan for your investment property?
When you have found your next investment property, speak to Better Mortgage Management about getting a home loan that is right for you. With over 40 diverse home loans (& commercial loans), we can help you find the best loan for you. Whether your self-employed or working full time; contact BMM and we will help you find a Better home loan.