A property purchase should be treated like any other major purchase in your life. Which means, doing your research before buying. Your goal – when investing in property – should be to achieve the most growth possible in a marketplace. To help you maximise your investment efforts, here are the top five questions you need to be answering when conducting your area research.
Question #1 – Is the economy strong and growing?
The economic foundation of the suburb you are looking to invest in needs to be strong. To determine the economic growth and strength of the suburb, you need to consider aspects like: business growth, wage growth and infrastructure spending.
You also need to be looking into the local council’s plans in the area. Are they a progressive, growth-minded organisation? What are their future plans for the area? If the council is strong and has established well-planned goals for the suburb, then you can generally expect growth to be a result.
Question #2 – What part of the cycle is the market sitting in?
“After expansion comes contraction, but after contraction comes expansion.” This time-proven phrase perfectly explains the property market cycle. What it means, is that when you are investing in property you want to make sure you are buying low and selling high. Buying at the bottom of the market, puts you in a better position to gain the most capital growth as the market reaches its peak once again.
Question #3 – What is the area’s infrastructure spend?
In a growing economy, money will be sent on infrastructure to meet its needs. You need to be looking for suburbs that are making infrastructure spend a priority. Ask these questions: is gentrification happening, are major projects being actioned, are there plans for changes and improvements to both private and public transportation and community buildings, and are new businesses moving into the area? If the answers to these are ‘no’, then you need to be looking elsewhere.
Question #4 – Does the location suit your lifestyle, budget and needs?
Property investment is all about location. As the saying goes: “location, location, location”. While you may be able to improve a property, you can’t change its location. Which is why area research is such a vital first step for anyone looking to invest in property. You need to determine which areas fit within your price range. Then, if you are owner occupying, you need to look at aspects like: is it an easy distance to-and-from work, will it suit my future plans or future growth, is it located nearby local shops and amenities, is it too close to a busy road, etc. You need to ensure it is a suitable investment, but also a suitable choice for your lifestyle and needs. Typically, if it doesn’t suit your needs, it may not suit any future buyers needs either.
Question #5 – What are the extra expenses?
The absolute worst thing you can do when investing in property is go over budget. You need to look carefully at all of the extra expenses involved in your purchase and ensure that the total cost will still meet your budget. Extra expenses may include: stamp duty, mortgage fees, solicitor fees, inspection fees, etc. You need to factor in the additional costs to your purchase price to ensure the total is not over budget.
Asking yourself these five questions can help make sure your property purchase is the absolute right investment for you and can potentially save you money and a lot of stress along the path to property ownership.