Articles

How to find the right location for your investment property

Wednesday, November 13, 2019

Looking to buy an investment property? Finding the right location is crucial to the success of your investment. Here are our top tips to help you choose the right spot.

Tip #1: Ask us to explain your borrowing capacity

Before you start shopping for your investment property, it’s important to understand how much a bank is likely to lend you for the purchase. Having a clear understanding of your borrowing capacity will help you to narrow down your suburb search.

Speak to us and we’ll run through your finances, then explain your borrowing capacity. We can also organise pre-approval on your finance, so that it’s ready to go when you do find the right investment property.

Tip #2: Decide on your investment strategy

Some investors are all about capital growth potential. Others are more interested in rental yield, which is the cash generated by your investment property as a percentage of its value.

Whether you choose to invest for capital growth or rental yield will likely affect the investment property location you choose. It’s a good idea to discuss these strategies with your financial advisor or accountant, including any tax implications.

Tip #3: Consider any infrastructure changes

Infrastructure developments can impact the capital growth potential of your investment, so it’s important to take them into consideration. Improvements like new transportation routes, education facilities and hospitals can drive up dwelling values.

As an example, the Sunshine Coast in Queensland was recently identified as a hotspot in HotSpotting’s National Top 10 Best Buys 2019 report. The Sunshine Coast’s property market has been performing strongly, thanks to more than $20 billion in infrastructure projects and private investment either completed, under construction or in the planning pipeline.

Check out whether the government has any projects planned for the suburbs you’re interested in and consider the long-term effects. How many jobs will be created? Will there be more demand for housing? If it’s transport infrastructure, will it cut down travel times and make the area more appealing to commuters?

Tip #4: Consider the lifestyle factor

Suburbs that offer access to amenities and lifestyle attractions are more likely to be popular with renters. When choosing an investment property location, consider the access to schools, shops, public transport, parks and recreational areas.

Tip #5: Investigate the different pockets in the suburb

Sometimes suburbs have “good” pockets and “bad” pockets, and it’s important to know the difference. Once you decide on a suburb, find out which are the preferred pockets.

One way to do this is to ask a local real estate agent to explain on a map which areas are more sought after. While the whole suburb may benefit from capital growth, prices in preferred pockets may rise even faster. At the end of the day, it may be worth spending a little extra to buy in a favourable pocket if possible.

Another way to do this is to look at property and suburb performance reports. We offer reports containing a wealth of information, from median market values to demographic breakdowns and more. Ask us about access to these.

Choosing the right location for your investment property is paramount, and we can give you the tools you need to make an informed decision. When you are ready to buy, we can line you up with the right loan for your specific needs, taking into account your investment strategy and financial goals. Please get in touch.