What’s the first rule of property buying? Choosing the right location!
This is just as true of property investment as it is of personal house buying. One of the main mistakes rookie property investors make is not researching the location they are looking at buying in.
There is an old saying, ‘Buy the worst house in the best street’ which is as true today as it ever was.
Now, for a rental this may be going too far, however, the principle still holds true. When looking at property investment, choose a good area and find something you can add value to. That could come from adding a garage, renovating outdated décor or extending the house to include another bedroom.
One of the reasons location is crucial is because it is closely tied in with capital growth. That’s where the big gains are to be made with property investment, not from the weekly rent you collect.
It is understandably tempting to buy an investment property in an outer suburb where properties are less expensive. However, not only is that less desirable for tenants and could affect both rental income and tenant turnover (and be harder to re-tenant), but it will take longer to realise capital gains.
Inner or middle circle locations will appreciate more quickly in value in a rising market which gives you more opportunity to enlarge your property portfolio. It’s a cascade effect.
While there is no question outer properties have their merits, their distance from services can be a negative factor.
So, when looking at your next property investment, do your homework. Check out the sales data available for your chosen suburb and work out whether it is likely to increase in value in the next decade. And only then, decide if it’s the right area to be considering.
Remember, choosing the right location is critical when buying property investments.