By Rich Harvey, CEO & Founder propertybuyer
If I’ve said it once, I’ve said it a thousand times – savvy property investors should always think of the long-term when buying real estate.
I mean a couple of things by this.
Firstly, being a long-term investor means you’re not speculative or obsessed with quick and risky short-term gains. Instead, you’ve got a strategy that means you’re best placed to weather any blips on the market radar, such as we’re seeing in Sydney and Melbourne at the moment.
But I’m also talking about future-proofing your investment. I’m talking about anticipating local changes, demographic shifts, infrastructure investments and supply and demand patterns.
By thinking ahead and examining the full picture you can ensure you maximise your return and avoid any stumbling blocks along the way. Here’s how.
What’s on the horizon?
Let’s say you’re looking at a modest three-bedroom house on a decent little chunk of land in an up-and-coming middle ring suburb in Sydney.
What do you know about it? You know it’s got good bones. You know there’s room to give it a revamp and increase its desirability. You know it’ll rent well. You know the suburb will probably gentrify more in the future.
Anything else?
What’s the area’s connection to the city and other major hubs like? Are there mid to long-term improvements slated that might not be widely known about? Have your checked government transport strategies to see if the vision includes anything positive for your potential purchase, from congestion-busting road links to rail or bus investment?
There can also be a negative side to big road investments. Say, if it’s a road with an expensive toll and motorists trying to dodge it will instead be funnelled through your suburb. There’s nothing like a doubling of traffic to really change an area’s look and feel. So, get to know the nitty gritty.
What about other things that buyers and renters want? Look at plans for education investments – a new school or increased day care services are always attractive. And what about the quality of schools? If the local public high school has steadily improved its standards over the years, chances are it will be on the radars or nearby mums and dads soon enough.
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Watch for demographic changes
Think about who the area appeals to now and see if you can forecast how that’s likely to change.
Marrickville in Sydney’s inner-west is a prime example of a suburb that has dramatically changed when it comes to demographics in just a decade.
It used to be a migrant area with sleepy streets, minimal services, stock-standard brick cottages and not a lot else. But it was on a rail line and a stone’s throw from the city, with some classic food haunts that hipsters loved.
Now, it’s one of the city’s real estate hot spots thanks to intense gentrification and major redevelopment.
Let’s say that suburb you’re looking at is showing signs of one day appealing to young professionals with one or two kids who like a nice lifestyle and have a certain taste. Will your place appeal?
Think about the size of the second and third bedroom, the amount of storage, the footprint of the kitchen and bathroom and the amount of yard. Is there a lock-up garage or scope for one? Is it within walking distance of a bus or train for when the kids are older? Is the street nice and safe with minimal traffic?
Or, let’s say it’s near an expanding university campus or booming hospital precinct. Will your place be right for that kind of tenant or future buyer? Is a big, premium house right for transient market? Or is the land big enough to perhaps house a duplex development down the track?
Scope out the local development pipeline. There could be projects that lift the appeal, look and feel of an area. It could also bring in a stack of new residents who make things feel more vibrant. But also, be wary of issues like oversupply or low-quality developments that bring new issues to the suburb.
Get the inside word
A buyer’s agent who works on the ground, is well-connected and comes with a wealth of experience is your best source for this kind of information – and more. They know what to look for now to meet your needs and investment strategy, but also what to anticipate for the future.
Knowing how a potential investment stacks up for the long-term can minimise your risk and maximise your return. And a buyer’s agent is your inside source for all of the information you need.
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