One of the first questions people ask us is where should I buy an investment property. Some people buy in areas they know, or feel comfortable in. This is great if you are going to live there.
However an investment property has a different purpose, you are trying to maximise your wealth through property investment therefore looking at the following Macro & Micro Indicators can give you real confidence that you are investing based on research and more than just a gut feel.
The government and private enterprise spend billions of dollars each year on roads, transport, hospitals, mining, resources etc. Look at what they are spending the funds on and what impact the infrastructure has long term in those areas.
The Australian national population growth rate was 1.7% or 394,000 new residents in Dec 2012. Take note of where those people are moving too. Is it a capital cities, regional cities or regional areas? We also look at interstate migration, which is generally associated with employment opportunities or lifestyle choices.
Economy and Employment
What is the diversity of industry? Consider what business/industry is in the area you are investing in. Does the area have a cross section of industries that can support current and future employment or is it reliant on one main industry?
Supply & Demand
Is there an oversupply or undersupply of residential housing? If there is an undersupply you are likely to see increased rental income and improved cash flow for an investor. In this scenario you will also see a lowering of the vacancy rate. Undersupply could also put pressure on property prices. With an oversupply the opposite normally occurs for an investor. Rents decrease, vacancy rates increase and property price can decline.
The better the amenities are the more attractive an area become for people wanting to rent. Look for good employment, schools, shopping centres, medical facilities, sporting facilities and café lifestyle.
Transport is a very important consideration. Look for a combination of good public transport. Does it service the area well especially in the exact areas you are looking to invest in?
Rent yields are determined by the supply and demand of property. When investing it’s finding the balance between your rental income and cash flow. If there is an oversupply of rental properties your rental income will reduce. This affects affordability and holding costs for investors.
Look at the price of the property relative to similar properties in the same area. This will give you an idea of the real value of the property. Also consider the likely resale value by looking at the properties that are currently being sold in the area.
Take a good look at the design of the house. Is it practical? Will people want to live in it? Does is have good natural light? What aspect does it face? What is the internal size of the property as this could affect future resale?
Projected Capital Growth
When you look at the macro and micro indicators to help you decide where to invest you give yourself a strong opportunity to see long-term growth with your property.
You can see that using these Macro & Micro Indicators can really help you answer that big and important question, where do I buy. If you would like to know more about this topic or you would like to suggest a topic for me to write about then please contact email@example.com