Location, Location, Location – the Key to Property Investment
Making the decision to buy an investment property can seem daunting and the many factors to consider don’t exactly make things easier. After all, choosing an investment property doesn’t just mean meeting your needs, but matching the broad requirements of the market.
One thing that we’re told from the very beginning is that location is essential. Today we’re going to examine the importance of location, what makes a setting great, and some other important factors to consider.
Why Location Matters
When it comes to investment properties, and real estate in general, location is most important because of the many ways it affects your property. You see, a great location will maximise your investment in more ways than one.
Firstly, there is the capital growth – or how much your property’s value changes over time. Capital growth is largely determined by the land your property sits on, and it’s an important measure because it’s more reliable than other factors.
Secondly, there are rental returns, which are likely to increase when you’re in a more desirable area. Combined with capital growth, this makes location the key factor in the profit your property generates.
Thirdly, a good location will also be practical – both for you as a property manager and for prospective clients. Striking that balance and appealing to a broad market is essential for you.
Now let’s look at a few things that make an ideal property position.
Know Your Budget
Budgeting is key in all real estate matters, but particularly when you’re trying to generate profit. If you overcommit on your budget, it can be hard to maintain a property and grow wealth – even in the best position. So look for the best location at the right price, something that is closest to an ideal position without blowing the budget.
Invest Near Infrastructure
Everybody wants to live near good infrastructure, from new roads, to public transport and beyond. No matter how picturesque a location is, it isn’t going to have the broad appeal you need if it isn’t sufficiently developed. Try looking at areas where construction is underway – you can get in early and take advantage of the growing momentum.
A great location will also mean easy access for schools, shopping centre and lifestyle. The demographic of your area might determine which amenities are most in demand, so always do your research.
Day and Night
Looking at a map and visiting a neighbourhood are like day and night – they’re completely different. Make sure you visit a neighbourhood, and make sure you do it at both day and night. This can reveal things about lighting, safety, the nightlife and more.
Don’t be afraid to venture into surrounding neighbourhoods either. They might present a similar option that better suits your needs, or they might warn you off the area altogether!
Other Things to Consider
Those are just a few location-based factors that determine the strength of your investment property. Here’s a quick list to further aid you in investment success.
1. Take the time to be a good property manager or hire someone who has the time
2. Examine the property cycle so you know the best times to buy and sell
3. Talk to experts to ensure your mortgage suits your needs
4. Dress up the property with neutral patterns and colours with a broad appeal
5. Talk to an expert about negative gearing and how it can work for you
6. Ensure the property is in good condition (and that it remains that way)
If you’re looking for a bit more guidance when it comes to property, talk to our consultancy experts at Astute Investment on 07 5530 8407. We provide investment strategies for clients in Queensland, focusing on long-term growth.