What makes a good investment suburb?

“We just chose a property, lick your finger put it up, which way the wind going, we’ll go there. That's how it came about,” he said.

Fortunately, their first property—a new $227,000 two-bedroom unit—turned out be a good buy. The real estate asset had all the basic fundamentals of a good investment, including a infrastructure and high level of demand, and it was able to produce good yield over time.

A few years and two more properties later, the couple realised that not everyone can get as lucky as they were. In fact, some people buy the wrong first property and regret as their investment journey get delayed for some time or, worse, totally derailed.

As they move along their journey, Mr and Ms Lacuna sought good property education to ensure that the outcomes of their future investments will not depend on good luck ever again.

Mr and Ms Lacuna’s number one advice to budding investors: Take time and effort to conduct thorough research and self-assessment before jumping into any purchase.

What are your goals? What will be the best way to achieve them considering your financial capabilities and limitations at the moment?

Ms Lacuna said: “I think the best thing to do is to look at where you are financially and then have a look at what you're going to be investing in. Would it be for capital growth or cash flow?”

“Ultimately, what's important is you do your due diligence. Speak to councils, have a look at what new developments are going on, and just ensure that you've done your research. Make sure that there's new infrastructure, new school, new hospital—the list is quite long,” she highlighted.

The couple shared how this simple advise changed their life and helped them grow a substantial nestegg through properties:

Finding good suburbs and properties

From the education and mentoring that they had, Mr and Ms Lacuna determined that location plays a big role in building a solid portfolio. In order to find a good location for your asset, you simply need to understand the level of supply and demand in the area.

Does the area have enough reasons for tenants to stay for a long period? The primary indicators of a growing population include infrastructure growth, jobs growth and an overall healthy local economy.

Ms Lacuna explained: “You want to make sure that your property is being rented and your mortgages are being paid 365 days a year. Ask the local council and the local agents about what's happening in the area — the developments, infrastructure, population, industries.”

Once you know the level of demand in the area, the next step would be to identify what kind of supply is needed by the majority of the population.

Are they families? Are they young couples or young professionals? All of these specific demographics have different needs and, as an investor, you need to be able to cater to them in order to avoid prolonged vacancy and ultimately enjoy good returns from your investment.

According to Ms Lacuna: “You want to make sure that your property is being rented and your mortgages are being paid 365 days a year. Ask the local council and the local agents about what's happening in the area—the developments, infrastructure, population, industries.”

“Ask them what do they like. Do they like a bit of backyard because majority of them are families? Or will you be catering to more young couples and young professionals? What exactly is it that the area governs? Find that out then you will know what's going to suit them better,” she added.

While personally speaking to the residents of the area will help, you can fast track your research by getting in touch with the local council for statistics or engaging local agents for their “on-the-ground knowledge”.

Capital cities vs regional areas

Like many budding investors, Mr and Ms Lacuna used to ask themselves whether it would be safer to invest in capital cities than in regional areas.

As they gain the ability to understand market movements through the education and mentoring they had over the years, the couple realised that “capital city or regional area?” might not be the right question to ask when investing in properties.

After all, every market offers a variety of opportunities and every investor can definitely capitalise on them, if only they know where to look.

Ms Lacuna said: “We gained confidence from the education that gave us the ability to do research and be able to identify areas that will or won't grow or will or won't provide the yield that we want. That’s not restricted to capital cities.”

“Everybody says capital cities return the best capital growth but there are some key regional areas that are doing fantastic. We should not blindly rule those out,” the property investor added.

According to her, investment decisions must not be based on emotions or hearsays and public sentiments but on thorough research backed by good guidance from experts and professionals, where appropriate.

“At the end of the day, you're buying a product that is going to serve a purpose for somebody and you just have to make sure that that product is kept at the best possible condition,” she concluded.

Tune in to Marcelo and Louise Lacuna’s episode on The Smart Property Investment Show to know more about the importance of doing due diligence and getting good property education.

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