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There are many factors to consider when purchasing a property for investment. Whilst the majority of investors purchase for the long term capital growth, there are a few who want the positive cash flow to be the redeeming quality of their investment property. Either philosophy will usually dictate the where and type of property to be purchased.
|However, if you could predict the next boom suburb and of course own an investment property in that suburb, the capital growth would be expediental in comparison to other suburbs. This is speculative investing and should not be the main reason behind a property purchase. A comparison would be to buy shares in a company that might one day make a huge discovery and hence the share price rises. The capital growth in either scenario might never be realized and therefore both are bad investments.|
Firstly, don't get caught up in the hype when you hear agents or developers say this area will be the next hotspot. The term has gathered momentum in recent months and can be a trap for the uneducated investor. There are many factors which will decide if and when a suburb or area will become desirable. Ultimately, it will be the consumer who will decide this, so thinking like one can be a great addition in your arsenal of tools. The following are some things to consider.
However, there are always ways as with any investment to stack the odds in your favor. The fundamentals of buying a property should never be changed but they can be enhanced by more research with the growth expectations of an area.
Price can dictate an area for many people and if adjoining suburbs are higher priced than this can be a factor in the desirability of a suburb.
Location of course is just as important. For example, a suburb beside an industrial area might not look so desirable as one beside bushland or a river.
Amenities such as shops, schools and transport are all factors whether a suburb becomes desirable or not. The fact that they might not have been built yet, or they are all in an adjoining suburb are all factors worth considering.
Future growth and planning of an area is just as important. Have there been announcements by government or developers to suggest large or small scale corridors of housing development? Mapping and housing data base tools can also be of some assistance in this area in understanding not only the terrain but the makeup of a suburb.
Lifestyle choices are just as important. Remember the sea change exodus years ago by the baby boomers. There have also been so called tree change exoduses by many professionals and retirees. These towns and suburbs have boomed with the influx of people and their money.
These are a few of the areas of research an astute investor will tackle when looking for the next hotspot. Remember though not to lose the fundamentals of good property investment with your next purchase.