When you look at the way we buy property, there can be a significant difference between buying your own home and investment property.
Generally speaking, a home that you want to live in yourself can be a very emotional purchase while an investment property might be more calculated and methodical.
However, as the premier buyers agency in Sydney, we know there are some key elements that we should examine closely when buying an investment property and we only have to look at things from the perspective of an owner-occupier to see what those factors might be.
Firstly, I like to invest in more of the blue-chip areas of Sydney and Newcastle. The reason being is that these areas feature a very low supply and there is always a very high level of demand.
It’s no surprise that these suburbs are very heavily owner-occupier driven, meaning that most people living there choose to make those properties their PPOR. Accordingly, these properties are normally priced at a premium.
Owner-occupiers put a very big focus on all the little things just as much as the big things, such as what suburb they are living in. When someone goes to invest in these same suburbs, you can quickly forget those small one-percenters, but it would be a mistake to do so as these one-percenters can lead to even stronger growth going forward.
For example, there are good and bad ends of each suburb. If you can walk to the beach quickly and easily, that is highly desirable for an owner-occupier. There are always going to be the more superior pockets of a suburb that offer better views, that will be hotly contested by future buyers and valued by owners, while at the same time, there is only ever going to be a finite supply.
Similarly, if your property is located on a major arterial road that might be a bit noisy, that is not the same as buying into a quiet street that would be safe for young children.
It’s the same with school zones. Oftentimes, neighbours in the same suburb could well be in different school zones, with the best performing schools normally priced at a premium.
When you start to combine all these little one-percenters you clearly see the pockets of a suburb where most people want to be. Over time, those pockets, that are largely driven by these owner-occupier factors, will cause a large price disparity with the other parts of the suburb.
The other factor to consider when looking at these highly desirable pockets is the fact that the owners generally don’t trade out of these locations very frequently.
In reality, many owners will do everything they can to hold these properties for decades at a time. This causes even more demand and lower supply as people are simply not able to access these types of properties or locations.
It’s no surprise that there are good and bad suburbs. However, when looking at a potential investment property, understand that there can be a significant difference between different parts of a suburb and the more appealing to owner-occupiers the better the long term investment.