Daimien Patterson is the CEO of Integrity Property Investment, a property investment company based in Australia. He regularly produces books, blogs and videos on the topic of property investing, helping thousands of people create financial security and freedom through education and property investment. Get started today.
My Property Investment Tip #7
Choose the right suburb!
In a previous tip I said “Buy where it’s booming” this is THE most important thing, because capital growth is THE biggest source of potential money to be made from your investment by far. Rent return and tax returns being the other two.
So once we’ve picked the right city, how do we know which suburb(s) to invest in?
The answers lie in considering the SUPPLY and DEMAND factors that are impacting housing in that city. Yes the basics. Economics 101.
So what factors affect the SUPPLY of housing? Well we need suitably zoned and available land to build on. A supply of skilled labour, and building materials.
Now I have seen all 3 be in short supply on various occasions. The supply of land can be restricted by physical constraints (like an established suburb which simply has no more land available to sub-divide) or artificial constraints such as political reasons that land won’t be released for sub-division.
Basically the less supply the better.
So then what about DEMAND? What factors affect that?
Well basically anything occurring that would make an area more desired to live in. Primarily that ends up being infrastructure, and there’s two types in my book.
1. Job creation, & 2. Amenities creation
Job creation seems obvious. X company build a new factory/office block with 500 jobs and starts recruiting. People take those jobs from all over and then the demand to live near that new employment centre rises. Rents usually take off first, then house prices follow.
The other is Amenities. Anything that makes an area more desirable to live in than it was before. A new shopping centre. A new school. A new public transport link. A new recreational facility. All of these things definitely raise the value of real estate around them.
So there you have it! When choosing a suburb, choose one that has its supply constrained, or at least controlled so the market isn’t flooded with too many new blocks of land, but most importantly look for new infrastructure.
If you need some help just ask.
Remember when the property market goes up, it’s the people who own all the properties that make all the money, and right now most people can get an investment property that will pay for itself. So why delay?