Why this real estate mogul believes investors should avoid ‘property hotspots’

“In those days, when an agent says to you that [a property] is close to public transport… it means it was on the highway. This one certainly was. It was on a very busy road facing the railway line,” Charles shared.

“But like all real estate cycles, they don’t grow at four or five per cent every year, [contrary to what] people like to think.” It just so happened that, a year later, the market boomed in that period of time, and I bought a $23,500-home that ended up selling less than a year and a half later for $38,500.”

More than holding an aesthetically-pleasing house or unit, it was critical for him to buy a property that he could afford in an area where capital growth is considered to be consistent based on recorded data. Unbeknownst to some, Punchbowl used to be one of the locations that people didn’t want to buy in because it was not considered a capital city.

“Nowadays, of course, it’s a different story. There are a lot of pockets around capital cities that people talk down. There are suburbs that people have negative comments to make about … Those are the areas, in my view, that have the most potential,” Charles said.

Like many successful property investors, he went on to learn that buying in so-called “property hotspots” will not benefit his portfolio in the long-term.

He explained: “If you’re going to keep buying where everybody tells you to buy, you’re going to be paying the highest possible price…. [Punchbowl] was one of those areas that has the transport but didn’t have the prestige.”

Nowadays, when people ask for his advice as a real estate agent, he tells them to choose investment properties based on its location and price instead of its appearance.

After all, property investment is all about creating wealth, and a good investor knows the importance of creating opportunities to continuously save money while manufacturing equity, as well as the value of striking a good balance between risk-taking and safe keeping.

“My advice is to buy in between those [hotspots] … A lot of times, people want to live in a certain postcard, and they live on the edge of another postcard. They always want to promote the postcard they live in rather than the one next door, [but] the one next door is the one where you get the best value,” Charles concluded.

Tune in to Charles Tarbey’s episode on The Smart Property Investment Show to know more about what concerns him most about investors in today's market, how investors can make sure they're "there when the boom happens," and why some investors have missed out on massive capital gains.