How To Select Peak Performance Suburbs
Price and rents
Price and rents
Target locations people can afford, so that when you sell your property, there will be people who can afford to buy.
If you invest in an expensive property of say $800k, when you want to sell it, there is then only a smaller market that can afford to buy it.
The ideal price range to target for investments is between $350,000 and $600,000. The market rent for a house in that price range is between 4.5% - 5% p.a., and for apartments it's between 4.5% - 6% p.a. These are high growth suburbs that on average give 10% capital growth a year.
Rural area locations can return 8 - 10% rental yield, but these locations give very little capital growth. In rural locations, it can take a very long time to find a tenant and the property may be old and may need lots of maintenance.
Quality
Always go for a good quality property, because quality lasts. A poor quality property will only cause you trouble later on - having to fix a leaking roof, repair broken plumbing, fix bad electrics, the list goes on...
In terms of quality, you get what you pay for. Don't pay less for a cheaper property that's not in good shape, it's a false economy. Pay a little bit more to get good quality.
Transportation
Look for property close to public transport, trams, trains or buses.
Demographics
Some of the property factors you should consider include:
-Population growth & tenant demand
-Employment centre type - blue collar and/or white collar
-Household structure - single, couples, couples with children
Facilities and amenities
Look for a location with an abundance of schools, shopping centres, employment, parks, medical centres, recreational facilities etc.
X-Factor!!!
An X-factor is a huge infrastructure development that causes property prices in that area, or near-by areas, to increase in value. Some X-factors include: a new freeway, a new shopping centre, a new rail line, or a new marina for example.
Two ideal areas to invest in are:
First ideal locations: Apartments within 5 km to Melbourne CBD
Houses within 5km to the CBD are very expensive to invest in. In some locations the houses may be worth $800,000 or even $1.2m. So that leaves only apartments that are affordable to invest in which go from about $380,000.
The suburbs close to the CBD are in high demand for living/renting. Many people want to stay close to the CBD, their employment, hospitals and all other amenities and facilities. This makes these locations very easy to rent out and the rent therefore can also be high. The types of tenant attracted to apartments in these areas are professional couples or individuals that like to rent close to work.
University students also love to rent in these locations. There are 2 major universities within Melbourne CBD: Melbourne University and RMIT University.
Second ideal locations: Affordable house and land packages in Melbourne growth corridor
Apart from affordable apartments close to the CBD, other great locations to invest in are in Melbourne growth corridors like the city of Wyndham located in Melbourne West, which includes suburbs such as Point Cook, Tarneit, Truganina, Werribee, and Wyndham Vale. An area like Point Cook is only 20 km away from the CBD, and only 20 minutes' drive to Melbourne CBD off peak. It's got shopping centres, employment, private schools, hospitals, Melbourne Uni, and the Victorian Uni of Technology. Apart from being close to the CBD, it's got the most affordable house and land packages in Melbourne ranging from about $350,000 - $490,000. Since 2001 it has been the second fastest growing municipality in Melbourne with a population increase of 69,432. In 2009 - 2010, it was Australia's fastest growing municipality with a population increase of 12,604. (Source: City's Population Explosion, The Age, Friday, April 1, 2011)
Other growth corridors are in the northwest Council of Melton, which includes suburbs like Caroline Springs and Melton. In the north, there are areas like Craigieburn. In the southeast, there are the city of Casey suburbs like Pakenham.
by: Nhu Sang Duong
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