Your investment property doesn’t have to be located in your suburb, or even your city.
Because investing is a purely financial decision, it’s worth looking widely and staying open to all possibilities, so long as the key fundamentals are in place.
Here are some questions I ask my clients when they are trying to decide between buying in an area they know or venturing further afield.
Are the basics in place?
When looking for a good investment property, you need to think about your future tenants and their needs. Essentially, this boils down to infrastructure, amenities and access to public transport.
Infrastructure includes good roads, schools and hospitals within easy reach. Amenities are more about lifestyle—parks, green space, shopping areas, a local swimming pool, library and cafe strip. Areas with a sense of community and a ‘buzz’ will always attract tenants who want to tap into the lifestyle on offer but can’t necessarily afford to buy there themselves.
Public transport is also essential, to take people to their places of work and study. Along with this, local work opportunities are critical—the most idyllic location isn’t going to attract many tenants if there are no jobs.
Does the sales history and future of the property look good?
This is where you need some help digging out the sales history. As a licensed real estate agent, I have access to this information and it can be incredibly helpful in narrowing down your search.
It’s also about looking ahead—what is planned for the area or being built right now? By looking at both the history and future planning you can gain a good idea of how your investment is likely to perform in the long term. My preference is always for areas showing slow, steady gains thanks to diverse work opportunities and a great lifestyle. It’s these areas that I seek out and steer my clients towards, not the suburbs that are soaring in value due to one industry, such as mining. Yes, it’s tempting to dive in when an area is soaring in value, but it’s also risky and hard to know when to get out if the bubble bursts.
My strategy is to avoid those gambles altogether. A safer option is a suburb where people will always want to live, with many owner-occupied properties and more people wanting to get in than out. These areas tend to fare better when the market inevitably dips, too.
Are you buying with your head or your heart?
It’s tempting to buy an investment property in that beautiful coastal town close to you, in case you win the Lotto and can use it as a weekender. But an investment property is not a holiday home, and it needs to offer you good returns.
Equally, you may fall in love with a dreamy fixer-upper that you have noticed on your morning walks. But again, this may not work as an investment. Looking further afield, for example at other capital cities beyond your own, will allow you to find the best property for your financial future.
What are the benefits of buying close to home?
There are definitely benefits to buying close to home, and it’s not something that I rule out for my clients. You know your local area well, so can make an informed decision. Buying close to home can also be good for maintenance and property management, as you can access the property easily or build up a good relationship with a local property manager. Having said that, don’t miss a good opportunity just because you aren’t personally familiar with the area. Do some research, seek professional advice, and if the fundamentals are in place, take it further.