It’s the Million Dollar Question on every investors mind… where do I buy?
OR, WHERE DO I BUY IN BRISBANE?
And in a perfect world, I’d pull out my crystal ball, and pinpoint the exact location that will experience 15% – 20% growth in the next year and consistent returns thereafter.
Wouldn’t that be nice!
But as we all know, the reality is that no one REALLY knows where or when this type of growth will occur. Yes we can speculate and the “experts” can throw around suburbs in the media for you to consider, but at the end of the day, it’s anybody’s guess.
Damn I wish I had that crystal ball.
As an investor, you enter the market KNOWING there is always a risk.
A risk you’ll buy the wrong property. A risk you’ll buy in the wrong area and the biggest risk on every investor’s mind – you’ll lose your money.
But with that said, smart investors do their homework before they buy.
They educate themselves on what drives property markets and they connect the dots to make informed assumptions as to what will “probably” happen next.
Either this, or they team up with an experienced Buyer’s Agent who can give them the lowdown.
So getting back to that Million Dollar Question, here’s what the savvy, educated investors consider when they’re adding to their portfolio.
If you're investing in property, you need to be asking yourself these questions...
1. How has this area performed in the past?
Has there been volatility in terms of capital growth? In other words, has the area experienced what I call “spike” growth (a quick increase in median house price) followed by a rapid decline.
An area’s past performance is always a good indicator of how it will perform into the future. Remember this, and do your homework when it comes to capital growth performance and even vacancy.
For example, areas like North Lakes on Brisbane’s outer north (30 km from the CBD) have recently experienced spike growth since the train line went in, but when you track the numbers back over the last 10 years, the area has dismally under-performed the Brisbane average. Mining towns like Gladstone are also notorious for quick gains and big crashes.
2. Who lives in this area?
Is this area mostly owner occupiers who are doing up their forever homes or is it predominantly renters?
I’ve found that demographics certainly play a role in an area’s performance over the long term.
A wealthier, owner occupier demographic typically equates to more improvements in an area which results in increasing house prices over the long term.
In other words, people are spending money on their homes, essentially pulling the area “up”. This demographic will also pay more to live in certain areas, and if supply is low, well, you get my drift.
3. What is near this area?
Statistics have shown that properties within a 10km radius of a CBD in a capital city such as Brisbane or Sydney typically outperform those that fall outside of this area.
Why would this be, do you think?
Well, when we look at how us human beings tend to live, we can probably agree on the following…
We like to be within 15-30 minutes travel of where we work, and MOST people will work in the CBD or near to it.
But nowadays, we’re not JUST about work. We want a lifestyle too.
We like to walk to a coffee shop and grab our cappuccino fix in the morning, plus we like to be close to a major entertainment or shopping precinct so we can meet our friends for Saturday night drinks or take the kids to see a movie.
Essentially, we want to be amongst the action of what an area has to offer.
No action in your area? Then people probably won’t be breaking their wallets to move there.
What is the infrastructure like in the area? Are the roads clogged with traffic day in day out, or is there a train station that makes it handy to get to and from places?
Are there good schools close-by and is my house in the catchment area for these schools?
Can I walk to the shops to do my weekly grocery shop or is it a mission to get to a shopping precinct?
People always tend to consider the above when deciding where to live, and as an investor, you need to be able to interpret these trends and apply them when it comes to your property investment strategy.
Think supply and demand.
If your investment property ticks the boxes for the masses, then it’s likely to be a desirable candidate for tenants and also future buyers if you ever decide to sell.
Oh and one more thing, people don’t like to live on main roads, on train tracks, in small spaces or in areas where it doesn’t feel safe. Consider these too when making your choice on investment property.
And remember, nothing is ever GUARANTEED when it comes to property investment.
All we can do is take our investment dollars and invest them as strategically as possible.