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Why is location, location critical when investing in real estate?

February 8, 2022

Location, location, location is the first rule of property investing.

 To build wealth, real estate investors need to be sure there will be demand for their properties. Whether you’re investing for income or capital gains, or both, you’re going to need to buy an investment in a location popular with renters and buyers.

 For example, suppose the property is located within a popular school catchment. In that case, more tenants will potentially want to live there, which will ensure it has a high level of occupancy for income purposes. At the same time, buyers and investors will continue to drive up values due to the highly valued academic attributes of the local primary or high school. 

 Other factors that will provide a suburb or town with popular ‘location status’ include its proximity to an employment hub, for instance. A property like this will appeal to workers who want to rent or buy in the area. Such properties will likely achieve decent growth and occupancy levels that will drive up rental returns. 

 Sought-after locations will have other appealing characteristics, such as commuter accessibility. This accessibility will be provided by significant roadways or public transport options such as trains, buses, trams, and ferries. 

 A popular investment location will also have accessibility to hospitals and other medical facilities and lifestyle options such as retail, hospitality, and entertainment precincts – in other words, restaurants, bars, cafes and shopping centres. 

 Investing in a regional growth centre can offer cost benefits, such as lower entry costs than city markets and yields as high as 7 to 8%. However, before investing in a regional location, be sure to check whether it has consistent population growth and a diverse and robust economy that can provide plenty of work. Also, by having a diverse economy if one sector falters, other sectors, whether mining, agriculture, education, health, or retail, can help underpin demand for rental property. This economic and population information is usually readily available from the local council’s website or by checking in with your local Raine & Horne office in the town.

 Likewise, if a locale offers attractive employment opportunities, this factor can potentially drive-up investment yields and underpin high occupancy rates. 

 Finally, a location’s appearance and safety ratings matter too. Attractive landscapes and community spaces, along with a reputation as a safe neighbourhood, may contribute significantly to a location’s appeal. 

 If you want to find out more about investing in real estate, contact a local Raine & Horne office today.