Location features to look for when investing
As with any investment it’s important to understand the underlying causes of capital growth. A basic economic principle is that if demand exceeds supply, prices will go up. Therefore, to get capital growth in the property market, you need to focus on demand. The greater the demand, the greater the capital growth. And one of the key influences on demand for an investment property is its location.
Good locations will always be in demand so spending time assessing and finding the best location is important. Here are 10 things to look in a neighbourhood to help you choose the right location.
1. Public transport
Properties within walking distance to public transport are both popular with tenants and buyers. As the majority of people travel each day to work, school or to the shops, properties in close proximity to a transportation hub, a train station, bus or tram stop, ferry, expressway ramp are highly sought after. The quicker the commute the bigger the demand. Keep in mind tenants don’t really want to be right on top of a freeway or right next to the train station but in close proximity…you get the idea.
Over recent years there has been an increased demand in properties and neighbourhoods that have resort like amenities. Tenants and future buyers love properties that have communal facilities such as pools, tennis courts, fitness centres, parks and play areas. These amenities don’t need to be part of your property, but if they are in the neighbourhood it can help increase demand and therefore the value of a property.
3. Walkable neighbourhood
Properties within easy walking access to places that meet the resident’s daily needs such as work, schools, shops, parks, eateries, medical centres, etc are increasingly desirable with both renters and buyers. In fact, in North America, real estate agents have been promoting property’s ‘Walk Score’ for a number of years as the higher the score the higher the property rental and sale price.
4. Future growth plans
Is your neighbourhood on the brink of transformation by urban renewal, gentrification or improved infrastructure? These can be good signs of potential future growth of an area. The local council is a good place to head to as they are normally across any planned future growth projects. Be careful the growth plans aren’t to support an area that has already boomed.
5. Heritage neighbourhoods
Many well-established suburbs with period architecture tend to have stronger resale value as this neighbourhood quality and historic charm is impossible to replicate. As councils strive to maintain the heritage value of the area, it helps preserve the neighbourhood’s look and feel and it turn adds value to the properties.
6. Good schools
If a property is located in a catchment area with good schools, and especially high performing public schools, it will ensure demand will be high for both renters and buyers. In fact, many parents will choose to rent or buy in a suburb that has strong education options for their kids.
7. Low crime rate
A neighbourhood with a strong safety record is also popular with renters and buyers. People want to feel they can walk freely around their suburb and that their kids can safely walk home from school. A safe neighbourhood will add value to a property and appeal to tenants.
8. Close but not too close
Keep in mind that tenants and future buyers like to be close to shopping centres, schools, cafés, entertainment and fitness facilities, but they don’t like to be right next door to them. Plus, not many people want to live next to a factory (unless It’s about to be converted into apartments), public toilets or police stations either.
9. Attractive landscaping and established trees
Buyers and renters alike prefer an attractive, landscaped neighbourhood, with tree lined streets. As more apartment buildings are built and more trees are removed to accommodate them, neighbourhoods that have retained their trees, have landscaped median strips and have clean and well-lit footpaths are often highly sort after.
10. Barriers to supply
How many competing properties are there in the neighbourhood, how difficult is it to build new units? The harder it is for developers to build, the more valuable your property may become. By limiting supply it in turn can help improve demand and therefore the value of the property. Some barriers to build may include: Natural borders such as lakes, rivers, oceans, national parks Man-made borders such as universities, protected parks Council development restrictions
For an in-depth look at the steps to invest in property, the costs of investing, where to add value to your property and how to reach and attract good tenants, read our information rich property investor page.
This information is provided subject to our Terms and Conditions.