If you are thinking of investing in property, you need to be aware that there are risks associated with property investment, but if you are well informed and understand those risks, then investing in property could yield a strong return over the long term. The key to a successful investment is to do your research, be well informed and look for indicators that a suburb has long term growth potential. Remember, property investment is a long-term endeavour. So, what are the signs of a strong suburb?
1. Suburbs with existing infrastructure or development potential
Choosing an area that has existing and well developed infrastructure is a key indicator that properties in the suburb will maintain their value and continue to attract buyers over the long term (whether for investment or for owner occupied purposes). Existing shopping centres, schools and public transport are important to ensure the continued growth of the value of the suburb.
New or planned development is a sign that properties within a suburb may increase in value once the development is completed. These developments may take time, but will likely drive growth in the area.
2. Choose areas close to good schools.
If you’re targeting families for your investment property, then it’s also a great idea to look for suburbs that are in the catchment area for popular schools. Just like central business districts, parents are also looking to live somewhere near schools where they will eventually send their children. The nearer your property is to a good school, the better chance you have of attracting families as tenants or future buyers.
3. Know how much you can afford.
We all have dream properties whether these are homes we wish to live in or one for investment. However, the reality is that you’ll still have to take your budget into consideration. This is especially important if you’re going to rent out the property because there may be times when it will be vacant, which means you’ll still have to pay the mortgage and the property-related expenses, without the benefit of offsetting these costs with the rental income. It is important to choose an investment that you can afford if situations like those happen.
4. Research your market.
Your investment decisions should also be based on hard data. Historical sales data for your proposed investment, along with sales data across the suburb can help provide guidance on property value and growth potential. Sales data will show you areas where there is consistent growth or stability in value, the average price of properties, and rental activity. Understanding the market in which you plan to invest is an essential tool in making smart investment decisions.
When considering an investment property, our mortgage brokers can assist you to find the right loan to purchase an investment property that ties into your overall growth strategy, personal and financial circumstances and goals. Get in touch with us today!