When does a 'property hotspot' become a good investment opportunity?
Many prospective property investors don't realize that so-called "property hotspots" today are places where they should have invested in two to three years ago, according to Smart Property Investment's Phil Tarrant.
Instead of asking where these hotspots are, he advised investors to actually know the factors that can make an area a hotspot in the future, and therefore a good investment opportunity in the present.
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"That involves a whole bunch of different things—wage growth, infrastructure, what the local government's doing, what the state governments are doing, what's the migration patterns... All these type[s] of things, which are going to indicate whether or not a property is going to go up in value. As property investors, that's what we want to happen," Phil said.
If property investors want to make the smartest decision for their next purchase, Phil suggested doing more than just "looking at the numbers," which is what most people do to identify so-called "property hotspots".
Avoid relying on news and other people to tell you where you should invest and actually do research on different areas' growth cycle, their population, the surrounding infrastructures, and other factors that might affect your asset.
"Most people typically look to justify the reason to invest in a particular area by looking at the numbers to see whether or not it corroborates with what they think is a good idea...; that’s completely the wrong way to be investing," Phil explained.
"Investing takes a lot more research, it takes a lot more understanding, it takes a real rational look at what you're trying to achieve as a property investor and what your long-term game is."
Positive Real Estate's Sam Saggers believes that one can always make money out of real estate no matter the state of the different markets.
"As long as it's a good capital city, people are going to wake up in 10, 15, 20 years, and the property should have gone up in value," Sam said.
According to Sam, property investors need only to equip themselves with good education and the right mentorship to enable them to make good financial decisions that will ultimately help them succeed in the business of creating wealth through property.
"We're looking at a time in the Australian market where, potentially, there isn't a wagon to jump on. Usually, there's always another new wagon or a news story that you can get behind. I actually believe [that], right now, the Australian property market is pretty flat. What does that mean? It's a race to quality," he said.
At the end of the day, there's been a lot of supply coming into the Australian property market in all capital cities
Instead of being on the lookout for these so-called property hotspots, property investors must focus on finding and maintaining a great property. After all, good-quality properties are what most people look for and are, therefore, almost always in demand.
"I've seen the Brisbane market sit flat for a few years now, but certain properties are going up in value, they are rising in value, and [that] really triggers, 'Why?' When you look at the 'why,' it comes down to the sheer metrics of supply versus demand. There's just not enough supply of really good property coming into the market, but there is a lot of demand out there," he explained.
"I think the oversupply of certain product coming to the market is creating this macro noise that the markets will be quite flat, and it is quite true, they will. But if you can buy the right property... you'll do well."
Tune in to Sam Saggers' episode on The Smart Property Investment Show to know more about some lemons he bought when he first started investing that nearly stopped his journey before it began and how he worked to rise above these unfortunate circumstances.
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