Question: I’ve been reading a lot of property books and the general advice they seem to give is to try avoid purchasing property in regional areas. I read this and it makes sense, but I can’t help feeling drawn to the area around where I live, which is Horsham, Victoria. It is not showing any great signs of growth, and it is quite a small town, but I feel comfortable in knowing the area like the back of my hand. I know which parts are the most appealing and I know exactly what properties working professionals here want to live in.
I recognise that investing in Sydney, Melbourne or any of the major Australian cities is a safer strategy, but I feel uncomfortable with the idea. I try to research areas in these cities, but it always feels so risky because I don’t live there and don’t have a local knowledge of the place.
Are there any circumstances where investing in a small, regional town can work? Or am I clinging too stubbornly to the idea of investing in my hometown?
Answer: In answer to your question, yes – you may be clinging to the idea of investing in your hometown. The good news for you is that this is not unusual.
This is not to say that an investment in Horsham is not a good one. However, it is important to remember and concentrate on the reason that you are investing in the first place, which I assume is to make money and minimise risk. You may feel comfortable with Horsham, but is it comfort that you are really seeking?
For an area to be a viable investment destination it should be one that has a number of factors. These include an increasing population, infrastructure development and a solid employment base.
I think something else that is important for someone in your situation to keep in mind is that “we don’t know what we don’t know” and that is why I suggest one of two options:
- Undergo extensive research and educate yourself on multiple markets. It is not just about selecting a good suburb, but also about choosing the right property within that suburb, in terms of location, condition and desirability from the rental pool. Speak to the local post office, shop keepers and a range of businesses to give you a good sense of the local economy. The problem with this suggestion is that to do it properly, you need to devote considerable time to the point where it is basically a full time job. This is also assuming you know what you are doing in the first place. Accurate assessment of property is not learned in days, weeks or even months – it takes years. This is why I strongly recommend the second option:
- Employ a local, licensed real estate buyers’ agent to do the job for you and at the same time, get a fast-tracked education in the process. Make sure it is a reputable agency, with a number of years in the industry and preferably an award winning company.
In the end, we all have to do things out of our comfort zone.But when it comes to property investing, you need to do enough due diligence to minimise the risks and take advantage of opportunities nationwide.
- Answer provided by Rich Harvey, propertybuyer.com.au