Where is the best place to buy an investment property?
When it comes to property investment, the question I get asked most is: "Where’s the best place to buy?"
People want a quick list of cities, but here’s the truth - it’s not about chasing trendy spots. The key to successful property investment is understanding the factors that drive growth and yield solid returns. It’s about spotting the signals of future success and uncovering hidden gems others miss. This approach will outlast any “top 10” list.
Let’s dive into the essential factors that should guide your property investment decisions. These aren’t just tips—they’re the foundation of a smart, long-term strategy.
1. 👩👩👧👦 Consistent, positive population growth: tTe key to finding high-growth investment locations
Why it matters: Imagine owning a rental property in a town that’s slowly emptying out. It doesn’t sound promising, does it? A consistent, positive population growth is non-negotiable when selecting your investment location. This growth indicates a thriving community where people want to live, work, and raise families - a place with a future.
What to look for: Steady increases in population over the years. Avoid areas with neutral, sporadic, or declining population trends. These could signal economic downturns, limited job opportunities, or a lack of amenities- all of which can lead to higher investment risks.
Pro tip: Check out local government data, census reports, or even news articles that discuss future developments and population trends. This insight can help you gauge the potential of the area you're considering.
2. 📖 Strong employment diversity = Stronger job markets
Why it matters: A diverse job market isn’t just good for the local economy - it’s also great for your investment. When a town or city offers a wide range of employer types and sizes, it provides tenants with job security and options. This stability translates into a more reliable rental income for you.
What to look for: Cities with a mix of industries - tech, manufacturing, education, healthcare, etc. This diversity reduces the risk of economic downturns that could leave your tenants jobless and unable to pay rent.
Pro tip: Investigate the major employers in the area. Are there any large companies planning to set up shop or expand? This could be a golden opportunity for future tenant demand.
3. 🌳 High land potential to add future wealth
Why it matters: Land is often an overlooked asset in property investment. But here’s the exciting part - new granny flat rules are on the horizon, slated to come into effect in 2025. These rules will allow for 60 sqm dwellings on your existing land, cutting through the red tape of current consenting processes. This means more rental opportunities with less hassle.
What to look for: Properties with larger land sizes that offer subdivision potential. Even without the new granny flat rules, more land equates to more opportunities for future value-add through development.
Pro tip: Keep an eye on local zoning changes and new regulations that could impact land use. This can give you a head start in maximizing your investment.
4. 💸 Cashflow: Identifying high-demand rental markets
Why it matters: Cashflow is the lifeblood of your property investment strategy. A property might look great on paper, but if it doesn’t generate enough cashflow, it can quickly become a liability rather than an asset.
What to look for: Research the type of rental properties that are in short supply but high demand in your chosen area. This is the core of what we focus on at Accelerate. By targeting these properties, you can ensure a steady stream of income that covers your costs and provides a healthy profit.
Pro Tip: Consider multi-family units or properties that can be easily converted into multiple rentals. This can significantly boost your cashflow without requiring a massive initial investment.
5. 🏠 Beneficial zoning: Understanding zoning laws for successful property development
Why it matters: Zoning laws can either be your best friend or your worst enemy. Favorable zoning rules can open up a range of future development options, increasing the potential value of your property. On the flip side, restrictive zoning can limit what you can do with your property, capping its growth potential.
What to look for: Areas with flexible zoning that allows for various types of developments. Whether you plan to develop the property yourself or sell it to someone who will, favorable zoning can significantly increase your property’s value.
Pro tip: Consult with a local urban planner or zoning expert to understand the long-term development possibilities in your chosen area. This foresight can save you from costly mistakes and missed opportunities.
6. 🔨Evidence of development: Spotting the signs of a growing property market
Why It Matters: Development is a clear indicator of where money and growth are headed. New infrastructure, like supermarkets, public transport, and roads, along with an influx of first-home buyers, signals a booming area ripe for investment.
What to Look For: Evidence of fresh money flowing into the location. New builds, infrastructure projects, and community amenities are all signs of an area on the rise.
Pro Tip: Visit the area and see the developments firsthand. This will give you a feel for the neighborhood’s growth potential and help you spot opportunities others might miss.
The Bottom Line
Finding the best place to buy is about more than just picking a spot on the map - it’s about understanding the dynamics that make a location thrive. By focusing on population growth, employment diversity, land potential, cashflow, zoning, and development, you can make informed decisions that set you up for long-term success.
Remember, property investment is a journey, not a race. Take your time to research, plan, and execute your strategy with these key factors in mind, and you’ll be well on your way to building a profitable portfolio.