It’s the question on every investor’s lips – where am I going to get the best capital growth and rent returns? Should I invest in a blue chip suburb or head out to a mining town?

The answer is quite simple if you want the growth and good rent returns:

 Where to buy - booming - infographics

Yes, that’s right! Buy where it’s booming. It doesn’t make sense to buy anywhere but a location that is booming. You want to put your money where it will give you the best return so that you can reinvest sooner and grow your portfolio faster – that’s the whole aim of the game.

It’s worth mentioning that a location that has already boomed is probably not your best bet – you need to get in before any real price growth happens, so you have to be on the lookout for signs that a boom is about to occur.

 Where to buy - infographics

Our researchers use a specific method to identify a boom town – we look for 4 factors in a potential investment location to analyze whether it is about to boom.

A lack of land means that prices can’t be brought down by developers flooding the market with a tonne of new properties. When less properties are available in an area, demand will increase.

A lack of skilled labour in an area means that it will cost more to build new houses, which sets the market prices in the area higher. In other words, if building a new property in your suburb will cost more, then your existing property will also cost more!

Population increases will put pressure on current rents and house prices to increase, as demand for existing properties goes up. Population is generally increasing in most areas of the country, but you can get considerable price growth from an influx of industry and infrastructure in an area from the accelerated growth they bring.

An increase in average wages is good news for investors because it will mean that local renters can afford higher rent, and potential buyers will be able to pay more for properties.

You can see that identifying a boom location can take a lot of research, but it is possible to do. There are plenty of resources out there (some free even!) that you can use for this research, or you can speak to a company who does their own research in-house.

To get more tips for property investors, download our free e-book today!

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