When it comes to residential property investment, there’s a lot to learn if you’re just getting started. The investment potential of a property goes beyond the simple factors like a kerb appeal and nearby amenities.
If you’re looking to get into residential real estate, location is key. Factors like population growth, local community amenities, school zones and access to public transport are important to consider when investing in a property.
In order to ensure that you choose the right location, there are a few things that you need to thoroughly understand. To help, we’ve discussed the key factors that you need to keep in mind when deciding on a property to invest in.
- Research Suburb Demographics
Whether you’re looking to sell or rent out a property, demographic research is important. For example, understanding the average age of home buyers in the areas you’re considering will give you an idea of what potential tenants are looking for in terms of location and amenities. If they’re a little bit older, it’s likely that they’d want their home to be closer to schools and away from the bustling city. If your target demographic is younger, they will likely want a smaller place that’s closer to the central business district or a trendy suburb.
This information can help you plan your short-term and long-term investment strategy. With that in mind, recent studies do show that a significant number of older millennials are beginning to look for long-term home ownership. This is why it’s important to keep up-to-date with the latest home buying trends.
- Population Growth
A suburb with an increasing population will inevitably bring more schools, shopping centres, gyms, restaurants and other amenities to the area. This will make the properties in that location more appealing to buyers and tenants.
It’s easy to look at an established suburb and wish that you had a property there. However, it might be smarter to look for areas that are currently expanding. Don’t just look at what’s there now. It’s important to look into the future and see if there are any plans to build new amenities in that area. This way, you’ll be able to get the property for a lower amount before the surrounding area becomes developed.
This might require a little more patience and, just like a lot of investments, might require you to take on some risks.
- Proximity to Public Transport
Access to public transport is a huge factor. The more convenient the location is in terms of travel, the more appealing it becomes. A short commute to the city, which is where a significant number of people work, is a privilege that many home buyers or tenants are willing to pay a premium for.
As a result, it’s a good idea to look for properties that are near train stations and bus stations. The closer the property is to the central business district of your area the more desirable your property will become.
Of course, established locations will most likely already be populated with homeowners. So, see if you can find areas that will soon have easy access to public transportations. For example, In Melbourne, there are plenty of new train lines and stations being built in the outer suburbs.
Also, keep in mind that some homeowners are looking to drive, walk or bike to work. As such, it’s good to keep in mind highways and busy roads when investing in a property.
- Lot Location
While living near a train station might be convenient, it can also be an annoyance. If your property is too close to a train station, you can expect noise, traffic and maybe even some vandalism. The same goes for living near commercial properties, schools, supermarkets and so on.
Of course, this all depends on the homebuyer or tenant. Some prefer the peace and quiet that comes with a cul-de-sac home, others don’t mind the background noise of trains whizzing past. As a rule of thumb, it’s a good idea to balance convenience with privacy.
Your agent should be able to help you find the crime rates in the suburbs that you’re considering. The key things to note is whether or not the crime rates are increasing; the type of crimes that occur in the area; public complaints and street lighting. Also, consider the safety features that the neighbourhood has. Is it a gated community? Is there a neighbourhood watch? Where is the nearby police station?
If in doubt, you can also ask the residents there about their experiences. Perhaps, you have friends that live near that area. Ask them if they’ve had issues in the past.
This might seem like an obvious point, but, with so many people focusing on price, it can be overlooked.
Of course, despite checking all of these things, you might still not get the results that you want. Unfortunately, that’s just simply the nature of the housing market. If you do get it right, the returns that you can get can be huge. However, just like with anything, you need to do the work. Make sure you do the necessary research before committing to a particular property and a particular location. There is an endless list of things to consider but the points above should give you a solid starting point.