Many property investors tend to stay away from regional towns, believing that real estate assets in capital cities make for safe investments, but Propertyology’s Simon Pressley says anyone can find gold in regional Australia – if only they know what to look for.
Through the years, Simon and his team have conducted property market research which proves that no particular area could ever guarantee a truly safe investment for any property investor, whether one’s only beginning his journey or has acquired years’ worth of experiences.
“Perth and Darwin are now in their third year of decline. Every capital city’s had periods of decline before, and will again in the future ... [because] capital city doesn’t make a blue chip. It often means it’s expensive, we can pretty much guarantee that,” he explained.
Nowadays, property professionals are encouraging investors to “take the blinkers off” and start looking into regional towns to continue growing their property portfolio. Similar to investing in capital cities, it takes due diligence, proper research, and the right partnership to succeed in investing in regional Australia. Simon shares his personal “checklist” to determine whether a regional town is a good location for a property investment:
1. Diverse economy and good infrastructures
As a property market researcher, Simon's depends largely on economic data instead of historical property data or census data.
“Throughout Australia, there’s 30 to 40 really strong regional cities that really perform the role of a mini capital city, so we look for regional cities that have a very diverse economy – we don’t want a one-industry town,” he explained, “In the same way capital cities have multiple different industries that drive the economy, regional cities do that as well. You want to have [a] really good quality infrastructure.”
It will also do an investor good to research on the major employers in a regional town in order to gauge the supply-and-demand cycle in that particular area.
Simon said: “We dig further into who are the major employers or who’s proposing to expand their workforce in that particular city … Let’s say there’s a company that’s gonna do something that’s going to create an extra 200 jobs. Well, where are those 200 people going to live?”
2. Good quality facilities
Property investors must be on the lookout for regional towns that has a strong appeal to the masses – a place that they would love to stay in for a long time.
“If someone did want to live there, or did get transferred there with work, what’s going to keep them there? What’s going to make an enjoyable lifestyle?” he said. “We want good quality retail facilities. They need good quality healthcare, and as children go from primary school to high school and they choose a career path, can they do tertiary studies there or have they got no choice other than to relocate to a bigger city? [We need] central infrastructure.”
Due to the fact that the world continues to move faster every day, a good property in regional towns must be located in an area accessible to big cities. Gone are the days when people are fine with driving for hours from city to city.
“There’s a lot of regional centres throughout Australia now that are expanding airports, and different airlines are flying direct to locations,” Simon said.
Good transportation is one of the indicators of a location’s economic state and must, therefore, be one of a property investor’s requirement when purchasing a real estate asset.
For Simon and his team, a property’s affordability is non-negotiable – their buyer’s agents have never spent a dollar more than $500,000 on an investment property over the years that they have been helping investors find and purchase the right asset. According to him, rental yields are almost always guaranteed to be better when housing is affordable.
5. Good supply pipeline
Instead of just looking at current vacancy rate, property investors must have a critical look at an area’s supply pipeline, which could be a good gauge of how their property will perform in the long run.
“You could have a location that today has got a fairly low vacancy rate, but unbeknown to the DIY [do-it-yourself] property investor, there could be hundreds or thousands of new dwellings that have just been approved within a short period of time by the local government,” Simon said.
The property market researcher added: “[These are then] going to hit the market in the next couple of years, and then you quickly go into an oversupply situation.”
The property markets are changing as fast as the whole world is, and property investors must always keep their eyes open to new opportunities to advance their journey. One of the biggest challenges that property investors face nowadays is the so-called “information overload,” which could delay one’s success especially as he goes on to explore new ways to expand his portfolio, such as investing in regional Australia.
Smart Property Investment’s Phil Tarrant said that surrounding himself with good and reliable property professionals has helped him make better decisions as a property investor.
“It’s really [all about] synthesising what information you need to worry … and think about in order to make a decision … I feel as though myself using a buyers’ agent, I have a big advantage in the market against people who don’t have that support,” he said.
Phil added: “[These] people I’m using know a lot more than [I] do, so they’re able to price properties more effectively, they’re able to understand whether or not a property’s a good property or a bad property, whether the location is a good location or a bad location, based on all these different dynamics.”
His advice to property investors: Get the best professionals to support you throughout your journey to make sure that you are making the best decisions for the growth of your property portfolio. After all, property investment is a competitive game, and leveraging yourself through a good financial team is more than worth its weight in gold.
Tune in to Simon Pressley’s episode on The Smart Property Investment Show to know more about his advice for do-it-yourself investors as well as his checklist for what investors should consider when looking to regional towns for their next investment.