Where should I buy? 21/03/11

When purchasing investment property everybody has a different theory on where the best location is to buy. The answer is that there is no one location that is best to buy in and nor should anyone buy all their investments in the same location. Having said this, there are certain areas or “urban sprawls” that should be targeted for what I like to call “bullet proof investing”. It is very important that when we are purchasing property we target properties in locations that have been performing well over a long period of time (history has a habit of repeating itself when it comes to property investment) and locations that are close to infrastructure and the CBD. In Melbourne, Urban sprawl has a big bulge in the south and east, is more shallow in the north and shallower again In the West. This is because there is more infrastructure in the south and east than there is in the north and the west. You will also find that the price difference in the South and east in comparison with the West and north is quite noticeable (provided we are comparing similar properties). When saying this, I do not suggest, by any means that you do not look at purchasing in the north and West, but mean that you may not look as further out in terms of kilometers from the CBD in these locations. For example good infrastructure stretches all the way out to Mentone in the South and in the East Clayton, Mt Waverley, Burwood, and Box Hill (which is roughly 22kms away for East and 22kms for South). However in the north, good infrastructure stretches out to Reservoir, Fawkner, Glenroy, Oak Park (which is roughly 14kms from the CBD). The infrastructure then shallows further when we head out to the West with West Footscray, Kingsville, Williamstown, Altona Which is roughly 10kms for the west and further for Altona) The reason I include Altona is because there are certain pockets which are extremely close in infrastructure, relatively close to the CBD and also close to the beach.

When it comes to purchasing investment properties in the CBD, it means that you will generally be purchasing High rise properties with very little land content. These properties  will most likely incur high body corporate fees, are expensive and therefore have lower rental yields. because there is constant development in the Melbourne CBD if you were to purchase an investment property in the inner CBD your investment may be jeopardised buy the prospects of new high rise apartments being erected right next door. We all know that what drives price up is competition, and if development has a green light in your purchase zone (which in the CBD is more likely than not) many of of the potential buyers will have more options when it comes to purchase that no one will compete for the one apartment, in turn making growth prospects quite low.

In summery, when looking for investment properties, it is important to do your research, target areas close to infrastructure, within close proximity to CBD, and have easy access to major transport links. You want to target areas where there is no available land, yet ever increasing demand. You will also need to do research in relation to other properties that have sold in the area so you can gauge what properties are worth. Ensure that the building is structurally sound and have had all legal documentation looked over by a lawyers / solicitor to make sure you are not buying into anything unusual or unknown. There are many other aspects to consider when purchasing property and it can become very mind boggling, If you are having trouble with juggling all of these tasks, sourcing the properties, checking the documentation, researching the comparable sales, negotiating with the real estate agents, organising potential renovation work and everything else that comes with investment property, there are professional groups available to assist. These companies are called Buyers Advocates or Buyers Agents and they work solely for the buyer to ensure all the above is in order and negotiate the best price for you among other things.


Sam Rapke

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5 Responses to this article

My Money April 18, 2011 Reply

Decent little post on Melbourne investment property.

Maybe run a spell check before you post though.

Alicia Flemister November 22, 2011 Reply

Cool blog! I’ve just added it to bookmarks.


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James May 11, 2012 Reply

So where is the best place to buy in 2012??

Aaron May 17, 2012 Reply

I’ve just purchased land in Greenvale lakes, close to the station, highschool and primaryschool and close to the new freeway. Would this all help when alluring potential tenants?

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