Buying the wrong property in the wrong location can set you back years. Over the past 25 years I’ve seen so many people get tricked into buying in crazy locations… And you know why? Because there’s a compelling story attached to it. Now more than ever it’s important to let the numbers do the talking and let the emotion take a back seat.
There can be many reasons for seemingly sensible investors putting their hard earned money into locations that show little sign of serving their best interests. But in many of these cases it’s due to well funded national sales teams and skilled property “spruikers” targeting property investors that, for one reason or another, are just too busy to really examine the details.
In many cases it’s not until close review that it’s obvious that the properties for sale are simply not a quality product. Interestingly when you start getting in and seeing some of those locations during site visits quite often the appeal that presented nicely on paper quickly unravels. Believe it or not, often times these supposedly “great locations” may:
• Be flood-prone
• Feature unfortunate eyesores like major power lines or substations
• Be close to major road noise
• Have big industrial zones close by
• Have really high rental vacancy rates (I look for vacancy rates that are 2% or lower)
In the past I have even seen some locations be touted as the next “booming market” with vacancy rates as high as 6 or 7%, meaning that you may have to fight tooth and nail for a quality tenant, and that’s if you can get one at all!
As mentioned above, to avoid future heartache with an investment I always look for high demand markets first, typically with vacancy rates under the 2% mark (anything under 3% is an advantage for the investor). From there I have a further 25 point check list to go through, but starting with properties that are in high demand from renters gives you the advantage you need to succeed.
To learn more about some other key aspects of my 25 point check list just register below for my next free 30 min live webinar.
Another big tip for investors is to buy into suburbs with a high percentage of “owner-occupiers”. I’ve been into some suburbs where I’ve seen major property groups pushing sales very aggressively and I’ve thought to myself, “Oh my gosh, there’s no way I would like one of my team members to come into this particular subdivision. It looks like 80% of the people are renters”.
Often in neighbourhoods where there is a transient population, the lawns are overgrown, cars are chocked up on their axels on front yards and there’s a general sense of disrepair, even in relatively new subdivisions. Believe me, the properties looked much different in the brochure!
I have always preferred to have someone from my team, or myself, actually walk across the property and look through the eyes of a potential tenant before taking any further action. Can you hear any street noise? What does the community look like? Does it look like a family environment? Is it a quality environment? How is it going to be for the tenant who is going to live in that particular property?
I take this very seriously. Every property that goes through Stone Invest a member of our team has walked the land personally… every single time. It’s been a big part of my accomplishment in selecting growth markets around the country with a 100% success rate for the past 25 years.
Please click here to register for my next free live webinar where I’ll discuss more of my investing strategy and how you can do the same.