3 things to look for when investing in regional towns
MJ Anthony has successfully built a 12-property portfolio in a span of 13 years, and one the strategies he used to expand his portfolio is investing in regional Australia.
Aside from buying below market value and purchasing cash flow positive properties, he has also bought a lot of assets in regional towns such as Wellington in New South Wales.
“I've got no qualms purchasing in other regional towns provided the numbers stack up,” he said. Many investors often stay away from regional towns, mistakenly equating them with mining towns where a lot of people have been badly burnt in terms of investment.
However, MJ and Smart Property Investment’s Phil Tarrant believes that there is a lot of gold to be found in regional Australia, as long as an investor knows what to look for:
1. Population growth
According to MJ, no investor can succeed in a regional town with only 300 people in it.
He explained: “You have no supply and demand—it's too risky.”
Moreover, having a large population means having the demand for good infrastructures and establishments, which are practically prerequisites for good growth in investment.
“[You need] a large enough regional town with lots of people. How many schools? How many hospitals? Is there a Bunnings [and] a McDonalds? [Are] there infrastructure going in?”
2. Diverse economic base
More jobs mean more people, and more people means more demand for accommodation.
MJ said: “Definitely, good job growth [is important] ... Have a look at the census data as well. Is the town growing over time or is it shrinking? Are more people going into the town than leaving?”
“One of the key things will be diversified economic base— [the area should be] reliant on a number of different industries,” Phil added.
Both investors believe that having people depend on a single industry is one of the “alarm bells” that property investors should look out for.
3. Stay away from rivers
Lastly, for MJ, it’s always best to minimize risk by avoiding flood-affected areas.
“Almost every regional town is built on a river, so you've got to look for flood maps, make sure you don't buy in flood-affected areas... Just reduce your risk,” he said.
At the end of the day, whether a property investor decides to purchase in regional towns or in big cities, it will always do him good to remember the fundamentals of property investment.
Phil concluded: “Job growth, wage growth… investment of infrastructure—all these are key fundamentals that, whether it's a regional town or a big city, [a property investor] should be looking at.”
Tune in to MJ Anthony’s episode on The Smart Property Investment Show to know more about the investment strategy he hopes will grow his portfolio from 12 to 100 properties and secure him half a million in income each year.
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