We are often asked to give the most important thing about real estate investment, and generally, we won’t answer. There’s lots of factors that bring success in property investment. While we don’t want to lock in one single rule, there is a generalisation we do tend to follow over all others – and that’s the old saying ‘location, location, location’. If you were concerned about this when you purchased your family home, you need to be doubly concerned when you are looking for an investment property, and here’s why.
Property follows a cycle – values will fluctuate depending at what stage of the cycle you are. Properties in a good location will tend to be the last ones to be hit when the cycle turns downwards. They also tend to appreciate more rapidly and for longer periods than the properties in areas that are not as sought after locations. The opposite is true, of course. Prices of properties in poor locations are generally the first to go down and the last to rise. They can also have the biggest swings in value, exposing the investor to greater risk of losing out when they sell.
An investment property is usually rented once it is purchased. Location is also a contributing factor to your success I the rental market. If the location is attractive to renters, then rental prices will rise across time, increasing both the value of the property and your cash flow. Rental yield is higher in popular locations and these areas will tend to have a low vacancy rate, meaning your investment property in unlikely to be empty for very long.
The amenities of the area also determine how attractive an area is to live in and this of course impacts on investing in the area. Proximity to parks, shopping centres, gyms and food hubs can attract potential tenants.
Likewise, being close to schools can mean your property may be attractive to families, which may in turn lead to a long term consistent rental.
So … there’s no ONE rule, but keep location in mind when you are looking to add to your property portfolio. Don’t forget that Accrue Real Estate are here to help. We know the Melbourne property market and do the research to make sure the property you buy in in the best possible area.