Choosing the right investment property requires substantial consideration, leaving you to make a lot of choices.
One of the more significant choices you have to make is where you buy; not just the state or city, but down to the suburb itself. When it comes to maximising your returns, location can help you meet your goals or keep them just out of reach.
So why exactly is location important for rental properties?
You can’t change location
While this sounds quite obvious, there’s a reason the old adage “location, location, location” is still heard of today. When you buy a property, you can change almost everything about it - you can renovate what you don’t like, change the furniture, change the colour of the inside and outside but what you can’t change is the location.
Lack of thought around location might mean the factors that renters really look for (listed below) are not nearby. If renters can’t get what they need from the location of your property, they may look elsewhere.
Location impacts on supply and demand
As an investor, you need to determine the neighbourhoods that have a reasonable supply and demand ratio. This is important as it will influence the level of difficulty it takes to find a tenant for your property.
If there is an over supply of inventory in the area you’re purchasing in, it may be more challenging to find tenants. In contrast, an under supply of rental inventory will result in the opposite occuring.
Influences the desirability of the property
There are several factors that influence the desirability of a property to renters and a lot of them have to do with where the property is located. Proximity to other desirable locations can be quite a substantial factor in how your property is rented out.
The term location desirability doesn’t refer to the property being beachfront or in the most expensive neighbourhood in town. Nor does it mean the property has to be the Grand Hyatt of homes, but rather it refers to the property being close to other places tenants need or want from a rental.
Location factors that renters look for:
Proximity to amenities and public services
Proximity to schools
Safety of the area
Proximity to shopping centres, grocery stores and entertainment options
Access to parking
Access to public transport
Influences the type of tenants
Location can influence what market of tenants you’ll attract and even affect the turnover rate. For example: if your rental property is located nearby a local university campus, you could find your prospective tenants are mostly students, oftentimes from overseas. This may result in a higher turnover, with old tenants replaced by incoming students and shorter semester based lease times.
However, if you’ve purchased an apartment in a busy CBD, you’ll be more inclined to see young professionals or singles, in comparison to a townhouse or home in the suburbs that might attract more along the lines of families with children.
Depending on your personal investment goals and rental strategy, certain tenants may or may not fulfil your brief so keep this in mind when considering locations.
Investing in a property is a huge yet exciting decision and it goes without saying that it’s a substantial financial commitment. Ensuring you’re buying in a location that will yield the most return on that investment is an important factor - with these points in mind, you can find the right investment properties for your portfolio, fulfilling your goals.
If you’re looking for a property manager who will put your property investments first, complete with 5-star customer service and satisfaction guaranteed, contact the team at Combynd on (07) 5536 9594 or contact us online.