Forums / Property Investing / Help Needed! / How to pick a location worth investing in?

Viewing 16 posts - 1 through 16 (of 16 total)
  • Profile photo of meniamenia
    Member
    @menia
    Join Date: 2011
    Post Count: 11

    Hi All,

    I'm new to the forum and property investing. In the near future I would like to buy an investment property but am unsure what to start with? I'm reading up as much as I canto educate myself but am struggling to narrow down a location worth look at. I live in Wahroonga (Sydney) and would like to invest locally to make it easier for doing the research etc. at the same time I would prefer to start with a lower end of the market. One of the areas I was considering was Woy Woy due to its proximity to Sydney and Gosford Hospital.

    Anyone out there who has invested I that area and would be willing to share their learnings?

    At the same time any advice on how to find a better location?

    Thanks

    m

    Profile photo of CatalystCatalyst
    Participant
    @catalyst
    Join Date: 2008
    Post Count: 1,404

    Woy Woy has some good and bad areas. You really need to go there and walk the pavement. A fair bit of housing comm stock. Lots sold off a few years ago. Haven't looked for over 12 months so not sure what's happening now.

    Opinions differ about the gentrification of the area and whether it can shake the stigma. Some areas similar to Mt Druitt.

    What's your budget? And what's your strategy? That will determine what type of area.

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099

    First work out the following;

    1. Your current cash flow position

    2. if you buy an $X amount property how will your financial position and cash flow look like- what impact does it have

    3. Are you after positive gearing or more towards capital growth – or more with your current financial position and looking at what resource for the next 2-3 years which strategy are you more comfortable with

    4. Budget

    5. What's your risk tolerance – open to different areas? 

    6. Any financial and life style changes ( career change, marriage) that you expect in the next 2-3 years and how will this impact your investing style and budget 

    7. Do you have a "insurance" buffer in place ( cash, family support etc..)

    8. Hows your resource like? Family support, partner, cash, job security

    Most importantly DO NOT RUSH IT! and don't be afraid to ask for help.

    Regards,

    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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    Same Banks. Better Rates. Served With a Passion.

    Profile photo of 37propertygroup.com.au37propertygroup.com.au
    Participant
    @37propertygroup.com.au
    Join Date: 2012
    Post Count: 2

    Some advice on how to find a good location:

    – Look for areas with growing population and strong demographics i.e. the property you buy will have renters which the property caters for.

    – Limited new supply being built i.e. understand what is happening with surrounding properties and future developments.

    – Strong economics i.e. incomes, employment and industries.

    – Good infrastructure support i.e. public transport and highways.

    Profile photo of FreckleFreckle
    Blocked
    @freckle
    Join Date: 2012
    Post Count: 1,681

    Lived in Umina for a year back in 2000. It has it's ups and downs. Talk of a fast ferry got everyone excited there for a while but that died a slow death. Sydney's always going to grow so you have to look at where the population push is happening. Around 2000 it was the Central Coast with the F3 upgrade. Then the Blue mountains got popular with the M4 upgrades. After that Kellyville and Windsor became flavor of the moment with FHB's. Not sure what's happening with the Chatswood to Para rail link 'these days but it's that kind of infrastructure build based around easing the commute that generally concentrates interest in nearby suburbs.

    Look for the population  pressure points and you're likely to identify ares with potential.

    Always liked it around Wahroonga with the big leafy blocks and nice old style houses. It never did all that well though compared to other areas of Sydney

    Profile photo of meniamenia
    Member
    @menia
    Join Date: 2011
    Post Count: 11

    Big thanks for the advice so far.

    Ideally I'm looking to spend up to $300k and would prefer a positively geared property (or almost positively geared one). I find the whole idea of hoping to capital gains a little scary and like the idea of someone else (tennant) paying off the mortgage. At the end of the day if in 10/20 years time it doesn't go up in value as much as other areas then at least I'll have a mortgage free place.

    Any thoughts on that?

    cheers

    Profile photo of JhaiMitchellJhaiMitchell
    Member
    @jhaimitchell
    Join Date: 2012
    Post Count: 30

    If you have a "10/20 years time" out look and you really want to make sure you lock in that capital gain. 

    you can do this 2 ways;

    1) Ad a higher or better use to the property/land (renovation/build)

    2) Do your due diligence and focus on local Infrastructure

    I break it down how Infrastructure leads to property growth in my article about Blacktown

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,065

    Have a read of the Margaret Lomas book called 20 must ask questions. It has some good ideas for honing in on an area to invest in.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of A5h13yA5h13y
    Participant
    @a5h13y
    Join Date: 2013
    Post Count: 7

    Hi all,

                i am interested in purchasing + geared properties in regional NSW, the following are stats i think are important to look at, wondering if you guys had any to add and if you had any idea hoe=w to quantify this data or had a baseline to work from which would indicate whether the stat is + or – for investing in  the area. Thanks.

    Vacancy rate: 1.5 – 3%  Employment rate    :Capital gains increases:  Population:   Scarcity   growth rate:Future developments Local Industries:% New houses built Avg incomes

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Hi Menia

    I think you have your head screwed on and totally agree with you that you can live off rental income but cannot live off capital growth.

    We specialize through our Buyers Agency arm in locating properties just as you have outlined and find it is important to match the property with the clients goals and objectives.

    Too often i see clients being into properties that simply will not do what they wanted them to do.

    Careful property selection in areas that have the right drivers is paramount to building up a decent portfolio.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Hi A5

    I think you have the right idea.

    Thru the Buyers Agency arm i run with my business partner we look at a couple of other important drivers in relation to property proximity, university / hospital location in the town etc.

    Of course you want to try and buy in an area that will grow but yield and cash flow is more important as it the lifeline to increasing borrowing and moving ahead.

    Lenders don't lend against capital growth but the do lend against increased rental income.

    If you are prepared to look slightly further afield than NSW i think you will do very well.

    Maybe slightly biased but my gauge of dealing with a Buyers Agent or investment adviser is have they achieved what you wish to achieve or are they in merely for the remuneration.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of A5h13yA5h13y
    Participant
    @a5h13y
    Join Date: 2013
    Post Count: 7
    Qlds007 wrote:

    Thru the Buyers Agency arm i run with my business partner we look at a couple of other important drivers in relation to property proximity, university / hospital location in the town etc.

    So the issue i have is quantifying this, i.e what distance should the property be from these services and how deeply do i dissect this information for instance the availability of public transport would offset the negative affect of distance from dwelling to the university, but i would imagine this would also be further offset back in favour for a minimal distance of say 40 km to the nearest uni if the next closest was 1000 km. Please help if you can recommend some reading or half decent hard and fast rules.

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Ash,

    I do recall reading an article written many years ago by Michael Matusik which claimed property located within 1km of train stations, bus transit stations, transport hubs/nodes out-performed the remainder of the suburb by 15% (from memory).

    For this reason we tend to start near transport nodes and work from there when doing our research.

    Having said that – you need to be a little flexible when sifting through the 'stocklist' as sometimes a true bargain may become available for any number of reasons. Try not to over-analyse things rather get the big ticket items you want in your property, find a location that suits and then look for the gems in your chosen patch.

    Profile photo of Sure HarvestSure Harvest
    Member
    @sure-harvest
    Join Date: 2013
    Post Count: 15

    Hi Menia,

    Well done!! You're on track by considering to want to have an investment property. What you should consider next is why do you want an investment property? Reading  your post, it sounds like for income. These are some considerations you may want to review;

    1) how much of my own money am I willing to spend to generate an income?

    2) what types of tenants would I like to have to earn this income?

    3) what will I do if there are no tenants in the property?

    4) what is my exit strategy? Do I plan to sell in 10/20, do I plan to possibly move in?

    5) Am I getting unbiased property information?

    Property can be an emotional purchase, so remember you're investing for numbers, or in your case "income". Where are you current getting your property reports and statistical data from? We may be able to provide you with property and suburb information from Australia's leading property information specialists. These reports a national so you can grow your investments nationally and reduce expose to state based taxes like land tax.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    A5 that of course is properietary information and why we spend thousand of dollars on visiting towns and carrying out own research which we offer to our clients.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of JT7JT7
    Member
    @jt7
    Join Date: 2010
    Post Count: 286
    menia wrote:
    Hi All,

    I'm new to the forum and property investing. In the near future I would like to buy an investment property but am unsure what to start with? I'm reading up as much as I canto educate myself but am struggling to narrow down a location worth look at. I live in Wahroonga (Sydney) and would like to invest locally to make it easier for doing the research etc. at the same time I would prefer to start with a lower end of the market. One of the areas I was considering was Woy Woy due to its proximity to Sydney and Gosford Hospital.

    Anyone out there who has invested I that area and would be willing to share their learnings?

    At the same time any advice on how to find a better location?

    Thanks

    m

    Hi Menia,

    I agree with some of the comments posted in relation to cash flow. It is also vital you structure your finances and portfolio accordingly to allow you to continue purchasing. You need to learn the skills of dissecting a market and looking for those drivers that are going to encourage long term growth. Infrastructure along with population growth are important along with others such as commerce and commercial investment. 

    There are some fantastic regional markets that provide great cashflow and opportunity for capital growth over the long term. Time in the market is important however, I am a believer in timing a market as well. Ipswich and parts of Logan in Queensland offer some exposure to these driver's I've mentioned. The corridor that runs from Ipswich out to Toowoomba offers some good opportunities. 

    Most importantly you have to continue to educate yourself by reading everything you can get your hands on. Ask questions and begin dissecting markets. Become familiar with markets so you can look at a property and know the numbers immediately. It may be hard work at the start but like everything in life you have to pay the price to become something other than the ordinary. Everyone on this forum started where you are now and there are some very successful investors in this community. 

    Good luck with it all and stick around and soak it up. 

    Jack 

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