When you are doing research for your next investment property, you’ve probably come across the term ‘hotspot’ a million different times.
There’s a good reason for this, as property hotspots can be a good way to make a profitable investment and get in before a suburb booms.
However, there are many differing opinions on how important a hotspot really is. Is it something you should even be worrying about?
In this blog we will run through a little bit about property hotspots and whether you should be looking for them!
What Are Property Hotspots?
A real estate hotspot is a suburb or area that is predicted to ‘boom’ in house prices in the near future. The benefit of investing in such an area means that you can purchase your property at a lower price, and then in a few years, have more equity in the property.
As the housing market continues to develop and change in Australia, it has become much more competitive and difficult to find and predict where these hotspots will be.
Many property investors have had success at correctly predicting these areas, however it does not always go to plan. If you don’t have the right timing, you could either sell too early, or leave it too late and end up with a property that is worth less than what you paid for it.
However, with the strong demand for housing in Australia, in recent years it has been rare for a property to lose value.
So, should you be worried about finding a property hotspot?
How Do You Find the Best Place To Invest?
While a real estate hotspot is something you should be considering, it’s not the only thing you should be basing your decision on.
You need to be approaching property investing as a long term game. You may have more success over time if you choose an established area/suburb that is steadily growing, rather than a suburb that is only speculated to grow.
It’s always important that you do up to date research on the property market, and specific research on the suburb that you’re interested in.
You should be looking for things such as the median price and average rental yield in your chosen area, and using the knowledge to inform your decision.
Each investor may have a different goal and objective with their portfolio, so it’s important that you keep your own goals in mind when choosing your property.
You may be more interested in having a second stream of income with a rental income, and therefore looking for a solid rental property. You can then base your decision around that goal.
For example, if you’re looking in an area that has a high student population, you may end up looking for a property that has high appeal to students so you can consistently keep your property tenanted.
Basic concepts such as supply and demand still apply to something as complex as real estate.
Don’t Just Rely On Hotspots
Hot spots are just ONE part of the research and strategising that you should be doing when looking for your next investment property.
Like any investment, there are always risks, and you don’t want to invest your money expecting a suburb to boom, and then be disappointed when it doesn’t.
Not everyone has the time or the mindset to invest properly. However, that doesn’t mean you can’t make smart investments. If you struggle with research and don’t know where to start, the team at DDP Property can handle the entire process for you.
You can watch more of our educational content and read our tips here.
Our team of experienced experts already have all the insider information and market research to help ensure that you choose the right property for you.