Investment strategies – Hot spots or Proven performing suburbs
By Advantage Property | 5th Sep 17
Should you buy in hot spots or proven performing suburbs?
Some investors like to think buying in hotspots is a sure way to build a strong property portfolio, while others think investing in suburbs with a track record of capital growth are the way to go. So which strategy is best for you?
Pros and Cons of hotspots
Hotspots are emerging suburbs and usually have a lower entry price point as they are on route to becoming gentrified or popular due to urban sprawl. You are essentially “getting in” before there is an upturn cycle in that suburb, which will potentially result in a rapid capital growth. These suburbs are usually just outside preferred suburbs where substantial growth may not have occurred yet. If you get your timing and your suburb right, it could result in a speedy uplift in your equity which could allow you to expand your portfolio.
Sounds easy right? Well hotspots may not always bring their promise to fruition. Understanding and analysing suburb fundamentals are essential, picking a suburb at the wrong time in the cycle or on the promise of certain amenities and transport could slow down your capital growth if they don’t eventuate or progress.
Proven suburbs – the tried and tested performers
These suburbs are already steady and in demand, so finding tenants in proven suburbs will be easy. The thought is that buying in a tightly held suburbs, will work in protecting your investment long term through various cycles of the property market, if you plan to hold on to your investment for a certain period. Being surrounded by great schools, amenities and connectivity means that your investment is one that will improve in time and will have demand from both renters and buyers.
It’s also important to take into consideration that while those proven suburbs have been successful in the past, there’s no guarantee their growth will keep spiking. The higher entry price point may mean you have to hold on to your investment for longer.
Investing is about financial growth, so it comes down to understanding which strategy and opportunity will give you those returns for your portfolio and lifestyle.
In either strategy, there is a lot of leg work and analysing that is required. If you are time poor, not confident with your number crunching or don’t know which suburbs to invest in, make an appointment with us today. Our Buyers Agents are looking for property every day of the week on behalf of clients and have their finger on the pulse of every suburb. Call us on 1300 697 356 for a no obligation discussion with one of our team.