9 factors to consider when choosing an investment suburb
One of the most important factors to consider when investing in property is the location. Get the location right and you could see some serious growth potential, but get the location wrong, then your path to financial freedom could be severely damaged.
So how do you work out whether a suburb is worth investing in or not? One of the top questions buyers ask us on a regular basis is where shall I invest? Now one of the big mistakes people make is thinking that they need to invest close to where they live or in a suburb that they love. You need to remember that this investment property is not a home that you will be living in. It is simply a tool to get you to where you want to be.
You therefore need to be looking for high growth suburbs in up and coming areas. You should also consider investing interstate, especially if your current state that you live in has skyrocketed in price, such as Sydney. As Australia’s cities are at different stages of the property clock, this means there is ample opportunity to invest interstate, particularly in cities that are in rising markets.
So how do you work out which suburbs are the best ones to invest in right now? Here are 9 factors you need to consider first.
Here are 9 factors you need to consider when choosing an investment suburb.
1. Proximity to work In today’s society, people increasingly want convenience at their doorstep and living within easy reach of work lies at the top of many people’s priorities. Many people now work within the CBD, so being within easy reach of the city is a major drawcard. Also, the closer you are to the city, generally the higher the yield you will receive.
2. Lifestyle amenities You should also consider the amenities close by such as shops, restaurants and entertainment. A suburb with a strong community focus and lifestyle appeal will be far more desirable than a suburb with large amounts of industrial development. Plus, no one really wants to drive everywhere to grab a newspaper or some milk, we want our everyday amenities close to hand.
3. Growing population Look for suburbs with a strong and solid population growth and ideally suburbs with a high demand for property. This will make it far easier to rent out your property. By choosing a suburb in a regional or mining town then you are relying on this one industry. Growth here could plummet if the industry falls apart, creating greater risk for you and your property.
4. Transport Having public transport and major roads close by is also another appealing factor to look for. Many of those who rent may rely on public transport to travel, so having trains, buses or ferries within walking distance is a major selling point. For those that drive, then being close to major roads will also allow you to get around with ease.
5. Schools and hospitals Being close to reputable and high quality schools is also a big advantage. Families with children may want to live in a specific suburb due to the school catchment area, so having quality schools in easy reach can also be a big benefit. Being close to public or private hospitals is also a major drawcard, as both schools and hospitals are important employers, and staff tend to want to live nearby.
6. Future developments You should also look into what other future developments the suburb might have planned as this can positively or negatively affect your property. A new shopping centre or new train station can have a positive impact on your property, whilst a new power station would adversely affect your property. You can check with the local council to see what developments are planned. It is also good to find out what other residential developments might be coming to the area, as too much supply will create more competition and thereby too much demand if there is an oversupply of new property and not enough residents snapping them up.
7. Past growth As well as looking into the future, it is also beneficial to look into the past and see whether this suburb has had any high levels of growth recently. If it has, then it is unlikely there will be high amounts of growth anytime soon. You should therefore concentrate on suburbs that have not seen growth in a while and also look at neighbouring suburbs to see how well they are currently performing. A neighbouring suburb that is showing signs of rising growth could also indicate that your suburb will too be on the rise, due to the ripple effect.
8. Vacancy rate You also need to consider the vacancy rate. The higher the vacancy rate the harder it will be to tenant your property. You need to concentrate on suburbs with a low vacancy rate to avoid your property being left vacant for long periods of time, which can put you under severe financial strain.
9. Rental population As well as having a low vacancy rate, your suburb also needs to have a large rental population. A larger rental population means that there are more renters than owner occupiers living here, giving you a larger rental tenant pool to tap into.
Of course, there are many other important factors you need to consider when purchasing an investment property, but these nine factors are all worth considering to ensure you buy a solid investment property.
To find out more about investing in property and what suburbs in Australia are on the rise, it is best to speak to one of our friendly Property Consultants at iBuyNew. We can advise you on how to choose the best investment suburbs and what property types suit you. Call us today on 1300 123 463.
Published on 2nd of December 2016 by Marty Stanowich