How To Find A Good Suburb To Invest In

How To Find A Good Suburb To Invest In


How exactly do you find a good suburb to invest
in? So you want to invest in property. Obviously you want to choose a suburb that has minimum
risks and the potential for maximum returns. But what are the steps that you need to take
to actually find a good suburb to invest in? Hey, I am Ryan from OnProperty.com.au, helping
you find positive cash flow properties. This month we are talking all about how to research
a suburb and find good areas to invest in in order to announce my course on Advanced
Suburb Research, which you can find on OnProperty.com.au/suburb. So what are the steps that you need to take
to find a good suburb to invest in? So the first thing that you need to do is
to start broad. What most people do is they start from the ground up so they will find
a property, someone might send them a link and say, “Hey, look at this property” or they
might say, “My uncle is selling a property and you can buy it. And if you do not go through
a real estate agent he will give you a discount so he does not have to pay the agent’s fees.”
And so for one reason or another, you end up starting at the property level and you
then need to work your way up to understand, “Okay, is this a good suburb to invest in?
Is this property a good price?” But what tends to be a better way to approach
things is to actually start broad and so start at a state level or start at an area level.
So let us say you want to invest in Queensland, then let us first assess Gold Coast, Brisbane,
Sunshine Coast, Hervey Bay, maybe some regional areas as well. So assess them as areas and
first understand, “Okay, what kind of area do I feel comfortable with and want to invest
in?” So start broad and then start narrowing it down from there. So start broad and analyze
your area and look at things like past capital growth history. Look at the potential trends
for the area moving forward. Look at the demand-supply for the area. Look at vacancy rates in the
area and things like that. You can also go to council websites and you can try and assess
what infrastructure developments are going into an area. Are there … being created
in this area? Is the population growing or declining?
So what you want to do is to start to whittle down the area so you just have a couple of
areas you want to look at. And then you start going into the suburb research. And so what
I advise is to do research on a lot of different suburbs, not just one. The way most people
approach finding a good area to invest in or finding a good suburb to invest in is they
say, “Okay, here is a suburb. Suburb X. Is this a good suburb to invest in? Yes or no?”
So that is one way we can approach it. We can look at a suburb and say, “Should I invest
in this suburb? Yes or no?” But often that is very difficult for our minds to understand.
It is very difficult to collect enough data to understand is this a good suburb to invest
in, yes or no. And it is very difficult for the average investor because maybe you do
not understand what all the data means. Maybe you do not understand exactly how to research
a suburb. What is a lot more effective and a lot easier
is rather than pick a suburb and say is it good, yes or no; decide I want to find the
best suburb for me to invest in. And then you kind of spread out and you look at all
the different suburbs, but rather than looking at them individually and just looking at the
data and say, “Is this good, yes or no,” actually compare those suburbs to each other. So let
us say you decided the Gold Coast was a good place to invest. That is where I live. So
I will talk about it because I know it. Rather than saying, “Okay, the Gold Coast. There
is a suburb in the Gold Coast called Robina, do I want to invest in Robina, yes or no?”
That is the old way to do it. The better way to do it is to say, “Well, what are all the
suburbs of the Gold Coast? There is Robina. Mudgeeraba. Burleigh. Broadbeach. Surfers
Paradise. Southport. There are all of these different suburbs, right? So you can collect
all of the suburbs, do research and data on all of the suburbs and then lay them out in
front of you and compare them to each other and you will then be able to rank them in
order and you will see that some suburbs you definitely do not want to invest in and you
will see a few suburbs that really go to the top of the pile. And what you can then do
is assess those top suburbs and decide which of these top suburbs do you think is the best
for you. So rather than just choosing one suburb and hoping for the best, you are actually
assessing a wide variety of suburbs and you are ranking them on a scale to choose the
best suburb that is going to suit your investment goals.
So how do you find a good suburb to invest in, well, you start broad and then you need
to analyze each individual suburb, rank them in order to find the one that is best for
you. That is all well and good for me to say that but what about some tips on how to actually
analyze a suburb and when comparing suburbs, what are we looking at. And while I go into
this in full detail in the Advanced Suburb Research Course, I will give you a couple
of tips here. What I find as the best approach to suburb
research is to actually look for risk factors in the area. I like to call these red flags.
So red flags are indicators that the area may decrease in value or may not be promising
in terms of capital growth in the future. Some examples of a red flag could be high
vacancy rates of an area which could indicate there is an oversupply of properties in an
area, which could stagnate growth or could indicate that there is just not enough for
the properties that are there and could stagnate growth into the future. So what you want to
look for when you are looking in an area is to look for things that are red flags in an
area. High vacancy rates is one example. Growing vacancy rates is another example. If population
is declining, that is a red flag for an area. You also want to look at vendo discounting
to find out how much the properties are being discounted and the higher the discount indicates
that there is less demand and they have to discount their property and sell it for cheaper
in order to sell it. Vendo discounting, you can look at. Days on market, you can look
at as well and there are a couple of other things in there as well.
So what you want to do is go through the suburb, try and identify the red flags in the area
and then when you are comparing suburbs to each other, rather than saying, “Okay, this
one is growing and this one is growing, which one is going to grow by more?”, you can say,
“Okay, which suburbs have the most red flags and these are the biggest risks suburbs? Let
us cancel them out. Which suburbs do not have red flags or do not have many red flags?”
And so you keep them in a pile and then, once you have whittled down the list because of
all the risks in some areas, you can then say, “Okay, these areas have very low risks,
what is the potential upside and what is the data that I have collected showing me about
the future of this suburb?” And you can also go and do a more speculative research like
going through the streets and try and work out if it is a good area. You can look at
the percentage of people owning properties in the area versus renting. You can talk to
real estate agents. Talk to the council and all of that sort of stuff.
So look for red flags in an area. Whittle down the high risk areas and then compare
the areas you have and look at the growth factors in the area, how much demand is there,
which area has the lowest vacancy rate, all of that sort of stuff. So red flags, best
to look at first. And then after that you can begin to assess which area do you think
has the biggest potential for growth and why. You should now have a pretty clear shortlist
of potential suburbs to invest in and hopefully if you have done your research correctly then
most of these suburbs will be good suburbs to invest in. Now it will just be up to you
to choose the best suburb from all the good suburbs that are out there. And the best suburb
is really the one that is going to meet your investment needs better than any other suburb.
So it is not like one best suburb in Australia that everyone should be trying to invest in
but they just do not know about. Everybody has different financial goals and your financial
goals are different to my financial goals are different to Bob’s financial goals. So
understanding your financial goals and creating a property investment strategy to move you
towards that, that will then allow you to take the last step to assess the suburbs and
to say, “Of all these good suburbs, which suburb is going to help me achieve my financial
goal as quickly as possible or with the least risks as possible?” or whatever your main
priorities are. So just a recap, first thing that we want
to do is start broad and we want to look at different areas. Gold Coast is an area, Brisbane,
maybe you can segment that into north Brisbane and south Brisbane, west Brisbane, inner-city
Brisbane, few different areas there. You have Sunshine Coast as well. Assess those broad
areas and try to narrow those down. And once you have assessed a broad area, go through
and research all the suburbs in those areas and compare them to each other. Look for red
flags in suburbs or risk factors and then cancel out the high-risk suburbs. And then
look as well for suburbs that seem to have the best results and the most demand and the
most potential growth. And then the last step, once you have those good suburbs in that shortlist
you try and assess those suburbs to think, “Okay, which suburb is going to be best for
my property strategy and for my investment strategy to help me achieve my goals?”
So there is how to find a good suburb to invest in. I hope that this has been helpful, giving
you some insights into the steps to actually take to find a good suburb to invest in. You
can get more details on how to research a suburb as well as a one-page checklist that
you can follow while I walk you through exactly what data to collect as well as how to collect
the data using nothing but free tools and also how to make sense of the data so you
can really begin to understand an area. So if you want to take the next step in your
investing, you want to understand really how to understand whether a suburb is good or
not, then I do recommend the Advanced Suburb Research course which you can check out. Go
to OnProperty.com.au/suburb now in order to get access to that course. I know that course
is going to help a lot of people. So until next time guys, stay positive!

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