When it comes to investing in property, choosing the right neighbourhood can make a huge difference to rental yields and long-term capital growth. Savvy investors look for properties in areas that are likely to enjoy sustained demand over the lifespan of the investment and through to resale.
Demand can be fuelled by several factors. Researching a neighbourhood carefully and looking out for the following key points of appeal will help you choose an optimum location to boost your rental yield and maximise the potential resale value of your investment property.
1. The 10-minute neighbourhood
One of the key features tenants look for when renting is easy access to basic services and amenities. Enter the 10-minute neighbourhood, where a short walk or bike ride will get you to a corner store or local shopping strip, public transport, green spaces, schools and a decent café or two.
For even greater appeal, other amenities and services, such as hospitals and medical clinics, large retail centres, sports fields and cultural facilities, will ideally be not much more than a 30-minute walk or bike ride away.
2. School catchment zones
There will always be demand for properties within a premium school catchment area, both for families who want their children to attend and for the teachers and other staff who want to live close to work.
Proximity to prestigious private schools, selective high schools, top universities or other quality educational institutions will enhance the value of your property both in terms of rent and resale value.
3. A safe atmosphere
People want to feel secure in and around their homes, and prospective tenants will be put off by high crime rates, which will also affect the value of a property, demand and vacancy rates significantly.
Always look into the crime statistics for the area where you plan to invest to make sure it’s safe won’t feel intimidating for your prospective tenants.
4. Beauty
Not every property is going to have a spectacular ocean view, but there are several other aesthetic elements that will attract tenants and strengthen the resale value of your property.
Suburbs with well-maintained period architecture, mature gardens and tree-lined streets are all appealing to tenants, as are carefully looked-after community facilities and public areas.
5.Peace and quiet
While proximity to services and amenities is highly valued by renters, excessive noise from busy roads, railway tracks, factories or large-scale commercial centres is definitely not, and the income a property can earn is likely to drop if it’s in a noisy area.
Visit any potential investment property at different times of day to evaluate the impact of traffic and other disturbances before committing to a purchase.
6. Future prospects
Knowing what the future holds for your investment property and the surrounding neighbourhood is essential.
New developments that improve infrastructure and local amenities can increase the value of a property enormously, but there’s also the potential for property values to drop if a development means increased noise, blocked views or accessibility issues. Check with the local council to see what’s coming your way before you buy.
Another key to future-proofing your investment is to buy in an area where natural or man-made barriers such as lakes, parks and reserves, golf-courses or university grounds, limit further construction and, therefore, restrict supply.
Summing up
When you are searching for an investment property, remember to look beyond the property itself and identify features in the neighbourhood that will appeal to tenants and future buyers.
Proximity to services and amenities, a peaceful, safe atmosphere and an aesthetically pleasing outlook are the key neighbourhood elements that can boost the rental and resale value of your investment property.
Taking the time to research a neighbourhood by talking to your local real estate agent, checking with the local council and chatting to the neighbours will stand you in good stead when it comes to finding a property with the potential to maximise your returns and show steady capital growth over the term of your investment.
Other buying, selling and investing articles and resources
Guide to property investment success in NSW
Selling a house or apartment in NSW eBook
Buying a house or apartment in NSW eBook
Property investment in NSW FAQ’s
What is a property cycle and what drives a change?
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