Searching for investment properties in Australia is less like looking for a needle in a haystack and more like looking for a number of needles in many haystacks. There are more than 650 suburbs in greater Sydney alone. The prospect can be daunting, even for those with a property or two already under their belt.
There is, however, a proven property methodology for finding the right investment. Here are a few tips to help you through the process.
What to look for
If you're wanting to invest, you want to get a property that will see tremendous capital growth while not costing you dearly in the short run.
You therefore want to look for emerging areas that are on the cusp of growing and developing that also provide a low entry point in terms of price.
Business investment is usually a good sign that an area is up and coming. For instance, the North Lakes precinct in Brisbane has a new Westfield, Costco and IKEA. These are big companies that do a lot more research than the average investor, so if they think there's potential for growth, chances are there is. These businesses will also bring employment, another key factor for buyers.
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Another factor to look for is for an affordably priced area that appeals to a broad market of buyers. While North Lakes itself is seeing its prices growing, it's the surrounding areas that investors will want to look at, such as Mango Hill or Bakabin. Similarly, Geelong and Cranbourne in Melbourne are good examples of suburbs on the periphery of growing areas where prices are considerably lower.
Along with this, you want to find a property with a land component and, ideally, a new build. Land appreciation can add greatly to the value, while the higher depreciation rates of new properties can save you money in the long run.
What to avoid
It can be tempting to jump on a hot area that's currently doing spectacularly well, and try to ride the value rises. However, investing in property is a long-term affair - you want something with sustainable growth. If an area is doing especially well, by the time you buy into it, it may have reached the peak of the growth cycle already As we said above, you want something that will develop over time.
At the same time, don't look at price alone. Just because a suburb has a low entry point doesn't mean it's necessarily going to see massive value rises. It's not just one factor, but rather a combination, that makes an area enticing for buyers.
If you want to do some research, there are a number of sources you can use. Residex provides free reports on Australian suburbs, as do RP Data and SQM Research. You can find out about median prices and an area's growth history from these and other organisations. You can also get a free property investment plan from DPN by completing the above form, who can do this legwork for you.