If you want to invest in property that will perform strongly, it is critical that you take a strategic approach and do your due diligence; successful investors undertake thorough research prior to making a decision to purchase.
Start with the MACRO factors affecting the property market in the area you want to invest in, and then finish with the MICRO factors, to gain the complete picture.
Firstly, look at the health of the national market, then based on that, narrow down to a state, then suburb, then street, then property – there is plenty of information online to assist with the search, including statistical and demographic data; also, talking to local real estate professionals in the area of choice is also a good idea.
Make sure you chose a property that will appeal to owner-occupiers – eventually you will want to sell, and you want to ensure there’s an appetite for this style of property in this location into the future, so that solid price growth is highly likely. Plus, you want the property to appeal to prospective tenants.
Many savvy investors also avoid buying new and off-the-plan, where properties come in at a premium price, instead seeking properties below intrinsic value, wherever possible.
A high land to asset ratio is also desirable, where the land component makes up a significant part of the asset value, it doesn’t necessarily have to be a large block, but worth keeping this in mind. This is increasingly difficult in many new developments where high density living is often the only option.
Also consider potential to manufacture capital growth through future refurbishment, renovations or redevelopment, as a method of accelerating higher price growth.
Location, location, location – is always a key driving factor in any investment decision, looking at historical growth, current growth, and growth potential. Areas experiencing massive investment in infrastructure projects, or earmarked for future significant projects, such as airport expansions, new hospitals, and/or other major employment projects, are usually solid investment prospects.
Lifestyle is another driving factor, particularly as people are living longer, seeking a healthier work/life balance, and an increasing number of people are able to work from home, giving them freedom of movement at unprecedented levels.