When timed correctly, investing in properties situated in hot spots yield amazing results in a short amount of time. Property values have a tendency to shoot up in hotspots rapidly, which is why many property investors spend valuable time searching for the next hotspot they can invest in that will enable them to amass equity and build their portfolios without having to wait long.
The only problem is hotspots in Australia have mostly been associated with remote areas usually connected with the mining sector. Property investors also run the risk of being too late and hearing about hotspots at a time when property values have already shot up.
…which is why we have come up with a few tips on how to identify hotspots and grab opportunities before everyone gets in on them. Spot growth areas with these tricks.
Search for areas undergoing gentrification
To do that, you need to have knowledge of that area’s history and what kind of transformation the place is getting now. You also need to do research on property prices and the rate of its increase in the past couple of years. Conducting an ocular inspection will also tell you how the location is evolving in terms of residents, demographics, renovations, and new home constructions. You might also find retailers, restaurateurs, and other businesspeople from various industries planning to set up shop there.
Do not discount surrounding areas
If the hotspot you have your eyes on has already increased its property rates and you want to look for something cheaper but one that has an equal potential for value, seek the assistance of a commercial real estate broker and look around in the surrounding suburbs. If the market development is moving in that direction, you will still be able to ride the wave of growth. Generally, anything within a 10-kilometer radius of an area’s Central Business District, or CBD, has great potential for growth resulting from the ripple effect.
Monitor supply and demand
The supply-demand ratio of an area is a key indicator of its growth and price increase potential, especially when there is continued demand in the vicinity despite the suburb’s lack of build capacity. Here are some tips to locating low-supply, high-demand areas:
- Look for areas which are popular among renters.
- Study the demographics of renters or buyers who are moving into the area. Professionals in their mid-thirties usually have higher income and a greater buying or renting capacity as a result.
- Search for areas where the population is steadily growing.
Also, places where there are large infrastructure builds underway are more likely to experience a rise in housing demand as job posts open up. Getting to these areas while the market is fresh and the prices remain to be relatively tame can help you, as a property investor, get first dibs on great property deals that will yield generous rewards in the future.