Where to buy an Investment Property?
In my business I often get asked where to buy an Investment Property. It is difficult to just nominate a particular suburb in any capital or a town in rural Australia, and to be honest I refrain from providing any specific advice of this nature. However, there are a few guidelines a potential investor could follow to help decide an appropriate location to buy an investment property.
Invest in a location that has, or had, a significant amount of infrastructure being spent in the area. This infrastructure could be in the form of improved transport, shopping centre, road networks, or schools etc. It does not necessarily matter how the infrastructure is funded be it publicly or privately. The assumption is that improved infrastructure means a location becomes more desirable or accessible and therefore demand for housing will grow resulting in an investment property increasing in value whilst demand for rent also increases.
Invest in a location that has growing employment opportunities. As with guideline #1 sometimes the infrastructure being established will create short and long term employment opportunities. It is particularly helpful if those employment opportunities have a higher average wage than is experienced in the local area. For example Victoria is considering a second container port. If the proposed port was to open at Hastings on Western Port Bay it would have a significant impact on the average wage of the area. Growing employment and wages will increase demand for housing forcing prices in the area to increase. Good news if you have an investment property in that location.
…and a word of caution. Try to avoid locations that are driven by one industry. For example a mining town that only exists because of one mine or multiple mines of the same type, such as coal or iron ore. History shows that mining waxes and wanes and the value of and demand for any investment property in a single industry location will be tied to the movement of those industries.
So where has infrastructure been recently spent?
One such area is Toowoomba in Queensland. It is Australia’s second largest inland city and recently the Wagner family built a $200,000,000 curfew free airport that can land a jumbo jet! There is a full article in the link below but as a taste here is what one of the owners, John Wagner had to say; “By year five, the extra economic output was $450 million extra output for the Toowoomba local government area and 3,200 full-time jobs. So that’s what airports are about: they’re big economic enablers.”
As Toowoomba is a large city I would expect more research is required to determine in which area of Toowoomba to invest. And, if the developers of the airport are correct, one could expect reasonable long term growth in value and demand of an investment property.