Why you shouldn't buy a rental locally
Research recently examined by University of Tasmania and Sydney University economics experts showed that most Australian property investors purchase an investment property in their suburbs. The data was from 1,150,000 applications for mortgages between 2003 and 2009 and it showed that two-thirds of homeowners bought in their suburbs. There are a couple of reasons why you should think about buying in your suburb twice, and we have listed them below.
Although you may be partial to your suburb, after all, you are living there; it may not be the best investment decision, especially from a risk perspective. Investing in the same neighbourhood in which you live concentrates the possibility of a market downturn in one suburb. Investing in a different suburb, or even a different state, to where you live can be beneficial here to ensure that your financial risk is not concentrated in one area.
The choice gets too emotional
The data also showed that 20 percent of investors preferred their investment properties to be self-managed, which could be a key driver of why investors choose to invest close to home. It still raises the question, though, that this becomes a more emotional decision than it should be. After all, property investment is about the numbers so it can be counterintuitive to be emotionally attached to where you want to invest.
Define your desires before you decide
You have to decide what your long-term goals are with your next investment before you decide on a location. Is it a property you're going to move into one day, or is it just part of your wealth-building strategy? If you move to the property one day, buying in an area you'd like to live in may make more sense, even if it's close to your current home. However, in this case, you still need to understand and manage the risk.
Spend the time
One reason people are likely to invest in their region is because it is familiar. Nonetheless, taking some time to learn and explore your broader region, or other regions, will give you a better idea of how Australia's economy performs. Rather than rushing into an investment because the area is familiar, it is better to take some time to research up front.
Buying a home and investing in real estate are some of Australia's most important financial decisions so you have to take your time and do your research. You may discover, with some research, the potential for capital growth and rental yields that you never thought were possible; it only takes some patience and the ability to look outside where you currently live.
For further information about real estate in this area, contact No Bull Real Estate, your most reliable and friendly real estate agents in Newcastle & Lake Macquarie. Buying, selling, leasing for residential, commercial, industrial property, contact your local expert to buy, sell or lease today on 49552624 or www.nobullrealestate.com.au