What makes a great investment property? It’s a question we’re always asked at Wakelin Property Advisory, and with good reason. While it’s an obvious query, the answer is complex and must take into account a myriad of factors.
While this is by no means an exhaustive list, here are the main points to target when searching for, assessing and purchasing an investment property.
3 capital growth drivers
Strong underlying land value is a shared characteristic of great investment locations. Land is always a premium in top performing investment areas – it’s hard to come by, and certainly not easily accessible.
Scarcity value is also a major driver. A scarce property is generally a property type that’s fairly common within its area. For example, a period terrace house in Carlton is well recognised, highly sought after and finite in existence.
The third aspect is multifaceted demand. These are properties and locations that are attractive to more than just one buyer profile, which can include families, downsizers, upsizers, investors and renters alike. The competition between these buyers ensures strong demand and prices.
Infrastructure and services
Proximity to public transportation is a big factor. Whether it be commuting to work, travelling to entertainment events, or journeying to school – being close to trains, trams and buses is always desirable.
Access to quality education facilities is also a major driver, encompassing both primary and secondary, as well as private and public school options.
Public open space is another characteristic that’s highly sought after. There’s a reason Victorian license plates for many years were labeled with the ‘Garden State’ slogan. We love our open spaces, whether it be parks, ovals, beaches or rivers. This was reiterated and amplified during the pandemic lockdowns.
A nearby village that offers a local community feel is highly sought after. This has become increasingly so in recent times, as old shopping strips that became rundown in the 80s and 90s are rejuvenated by the cafe culture developing throughout the suburbs. Some great examples are Rathdowne Village in North Carlton, Burke Road in Camberwell and Ormond Road in Elwood.
Employment opportunities are also a factor. Infrastructure that provides large numbers of jobs, such as hospitals, is an attractive proposition. It definitely creates strong demand from a tenancy point of view.
Specific suburb draw cards make a big difference too. In the Bayside suburbs, the beach provides a big pull for many buyers. While in the inner northern suburbs like Fitzroy and Collingwood, the pub culture is very popular.
Consistent housing style
It doesn’t have to be Victorian or Edwardian, but a consistent or a very specific style or housing type, can be a major attraction for buyers.
That may well be period in style, but it can also be more recent, such as the converted warehouse apartments in suburbs like Collingwood and Fitzroy.
Moving into the suburbs; areas like Reservoir are well appreciated for mid-century architecture houses, while Bayside suburbs like Elwood are known for their good sized mid-century apartments.
Proximity to CBD
This has probably dropped off a little post-pandemic, with working from home making the office commute less routine. However that’s certainly starting to change, as we’re seeing office working requirements continue to come back to the fore.
Work aside, proximity to the CBD brings with it great lifestyle benefits, whether it be the arts precinct, sport and entertainment, or restaurants and nightlife. It helps underpin strong renter and homebuyer demand alike.
Take home message
Remember, not every property will score a 10 out of 10 on all fronts. However, hitting as many targets as possible will ensure multifaceted demand from both buyers and renters alike.
Thus, driving strong capital growth and rental income, for wealth creation now and into the years to come.