How do you choose where to buy an investment property? Not from the headlines. By the time a suburb is on the evening news as the next hot spot, the story is already in the price. Good research asks a quieter question: why will people want to live here in ten years, and what could stop them?
What I look at first
- Jobs. Where people work, how many, and whether those jobs are growing. A place without work does not hold its tenants.
- Transport and services. Roads, rail, schools, hospitals and shops, built or funded, not just promised.
- Supply. How many similar homes are coming. Plenty of new stock can hold rents down for years.
- Rental demand. Vacancy rates and how fast homes let, from a source that is not selling you the property.
- The land itself. Flood, bushfire and other overlays on council records, and what the zoning allows next door.
Facts drive out fear
A buyer was about to walk away from a well-priced new home because the area had a history of flooding. A day spent in council records showed the estate had been built up above the flood level, though one access road could still go under in a big event. With the facts in front of him he went ahead, knowing exactly what he was accepting. Without them, fear would have decided for him.
Where knowledge is lacking, fear fills the gap, and where research is missing, enthusiasm does. Either one costs money.
The price is not the place
A cheap property in a place with no reason to grow is not cheap. A dear property in a place with every reason can still carry too much risk if the weekly cost is more than you can hold. Your borrowing capacity, your budget and how long you can carry the costs belong in the choice of place as much as the map does.
Research does not remove risk. It shows you which risks you are taking, and that is the difference between a decision and a bet.
Nicholas Lockhart
General information only. No advice is given.