Imagine a lost tribe somewhere deep in the Amazon that have had no contact with western civilization. What would they say if you asked them what they look for in a home camp? Surely, their answer would be, “Location! Location! Location!”
From an early age it’s drummed into us. The undeniable truth that location is the single aspect of real estate that cannot be altered. Until some entrepreneur delivers us a teleporting device that will instantly beam us to work, school or our favourite cafe, then we must acknowledge that location is the answer to being near the services and facilities we need and desire.
Of course, you cannot deny the importance of location. The advisors at ASPIRE spend countless hours and extensive resources ensuring they select the best possible suburbs for investment
But an investor who relies on location alone needs to rethink their thinking, because there are numerous factors apart from location which will separate a good asset from a dud.
The Unsung Heroes of Property Investment Research
Demographic Analysis
Selecting the right location is foundational to good investing, but locations aren’t only about services and amenities. The best hotspots are also discovered through demographic analysis.
For example, to ensure substantial buyer and tenant demand, you need areas that have a high proportion of owner-occupier residents and a high density of population within close proximity. You want to look for suburbs where there are abundant high-income professionals, to ensure your target rental market will be able to afford your rent.
All these demographic elements work in tandem with the physical proximity of necessary conveniences to pinpoint excellent investment locations. However, it’s still possible to find a great location and totally strike out by choosing the wrong type of asset.
Some say that it’s better to have a dud property in a great location than a great property in a dud location – but why select a dud property in the first place? Do your job properly and you can have a sterling asset that fulfils all the criteria you desire.
Three Elements to Select the Right Property
There are three elements which encapsulate a great property option in a great location for me.
Position
Position refers to where a property physically sits within a given suburb. It can the difference between having dozens of tenants begging to rent your investment, or it sitting empty and unloved.
Great positions might include easy access (preferably walking distance) to community hubs and facilities, and/or ensuring you’re within the best possible school catchment. Position seeks to include quiet streets, elevation and aspect.
Oppositely, a bad position might be real estate that fronts a busy road. Similarly, a property that is right next door to a service station or an all-night takeaway food joint. These are often favoured by revellers on their way home from an evening out.
Likewise, if the property’s position puts it at risk of catching aromas from a nearby industrial estate, or worse, rubbish tip, then it is certainly not a property worth considering.
Design
It would be crazy to do all the research involved in demographic analysis of a suburb, only to invest in a property that does not appeal to the dominant renter and owner type.
For example, you know a particular, well-sought after suburb is full of upwardly mobile professionals with good incomes and multiple cars. Most already have (or plan to have) children and many work from home for a percentage of their week.
Armed with all this knowledge, why would you then invest in a one-bedroom apartment in a high-rise block in that suburb? It will sit idle, waiting for a tenant at a vastly lower rent than the suburb median.
Worst of all, when you eventually choose to sell, you won’t find nearly enough buyers. The capital growth potential for this investment will be lousy, despite your excellent locational selection.
Quality
New constructions are particularly appealing to investors. Not only do new builds offer great deprecation benefits, but the chances of extensive repair and maintenance are minimised. In addition, tenants love a new home – it smells and feels like a new car.
You will see and hear stories from plenty of investors who’ve come unstuck because the quality of the property they bought wasn’t up to scratch.
When you invest, be sure your developer and/or builder has a track record of excellent work. Good reputations translate into increased value in your portfolio for years to come.
Do Your Research
As you can see, a holistic approach to choosing an investment beyond the ‘Location! Location! Location!’ mantra is important. Therefore, you cannot simply read some self-serving article on a commentator’s blog revealing their latest ‘hotspot’, and then charge in willy-nilly without being discerning about your asset selection.
Instead, draw on the expertise of qualified and well-connected property investment advisors. Not only will they ensure you choose the right location, but also the ideal property.
Always review any property location research and investment analysis data, with a professional, QPIA (PIPA Member) qualified & accredited ASPIRE Property Advisor Network Advisor.
Never rely on glossy sales brochures or property marketing information, ensuring a property is right for your strategy. Property Investing is about BUYING a property that matches your goals and aligns with your investment strategy, never be SOLD an investment.
Email hello@prospaproperty.com.au or call us on 1300 660 335 to speak with a Property Investment Advisor.
