If you have done a good job of sorting out what your strategy is, you then need to devise a flexible plan of what to buy and when to buy it.
When it comes time to buy you will have worked out a sketch of what the property will be like so you sort of know what you are looking for, you just need to narrow down WHERE and WHAT it needs to be.
Assuming you fall into the category of wanting growth as a priority with yield as a close second (most common), you can start to look at what growth areas are going to be most LIKELY to bring you growth while remaining tenanted for highest percentage of the time at a good rental yield.
Your strategy work will have come up with which region you want to start in first.
Each person’s situation to start with and their goals are different so it shouldn’t be about searching to see what the closest ‘shiny thing’ is – my advice is to be strategic and buy what is more likely to get you closer to your goals sooner and NOT be distracted by shiny things.
Make sure whatever you buy fits the strategy and your plan to achieve your goals. I don’t say that to worry you or make you procrastinate endlessly, but to be focussed and disciplined so you can be satisfied that you have done the best you can with what you have at your disposal.
What is a ‘shiny thing’?
Let me talk about ‘shiny things’ for a moment. Why do the majority of investors who own an Investment Property in Australia (almost 90% of investors) buy a ‘shiny thing’ within about five kms of where they live? They buy something they see that stands out for superficial reasons, not what fits their well worked out strategy.
They first, obviously like it because that is where they decided to live so it must be a great and desirable place to live. They can drive past whenever they like and check out whether the tenant has been mowing lawns and looking after the garden.
Once you have decided what state and hopefully you are mainly looking at the three main eastern seaboard capitals (maybe Newcastle instead of Sydney depending on market timing), you can consider what suburbs are going to be better than others. I suggest you consider the below priority list when deciding on what suburbs to choose in preference to others.
The key tick boxes to consider are:
- Population growth
- Benchmark properties in that suburb
- 8. And percentage of investment properties compared to owner occupier
With about four million baby boomers retiring over the next 10–15 years, we need to beef up our workforces for several reasons but one scary one is that most people retire with an annual income of around $30,000 with less than $180,000 in their superannuation fund.
The ‘around $30,000 per year’ income includes income from their investments. For these people, we as a country, still need to support them both financially by way of the pension plus by covering the medical expenses of those who don’t have enough to pay for private health care etc.
When we had the high numbers of ‘boat people’ coming into Australia it was only between 20,000–30,000 people per year coming in illegally at its highest, as compared to our current annual overall growth of over 400,000 people increase per year.
Doesn’t sound so terrible when you look at it in that light now does it? I am not getting political so no soap boxes here, just giving perspective.
The highest population growth is being pushed to Melbourne, followed by Sydney and then Brisbane next, so these are the three key and most reliable markets I suggest you look at.
Once your strategy has decided which state and city, then look at what suburbs to avoid and what are pegged for best and reliable growth.