What role does location play when it comes to successful property investment, and what should you think about when it comes to picking the best location for your needs?
We recently secured a number of investment properties in Mangawhai, a township just 80-mins north of Auckland. It’s increasing in popularity as people move out of the big centres in favour of more laid-back living in the smaller towns – made possible by the increase of people working from home post-COVID.
As we continue to expand the areas where we source properties for our investors, we thought we’d take a look at the role location plays when it comes to successfully investing in property, and what you should be thinking about when it comes to picking a location to invest in.
When looking for a property to live in ourselves, the location we pick often relates to how close it is to our job, whether it’s close to good schools, and whether we like the area. For some, the ideal location might be in the middle of nowhere as it aligns with the lifestyle they want to lead and are willing to make certain sacrifices.
But when it comes to picking a location for your investment property – in terms of location – things like proximity to job opportunities, schools, public transportation, and council infrastructure take centre stage in the decision-making process, rather than whether it’s somewhere you think would be a nice place to live.
You also want to consider more long-term factors – like what population growth is projected to be for the region, and how that will impact demand for housing.
In the Mangawhai area, for example, the population is set to more than double by 2051 with development already underway to expand the availability of housing and amenities. This includes building more schools, retirement living and health care to support the requirements of that increase in population.
Your financial situation and needs will also play a large role in the location of the property you end up investing in. This includes the purchase price you’re able to afford as well as your requirements when it comes to capital gains and rental yields – as these can differ from region to region.
Rental yields in Auckland, for example, top out at about 4%. Meanwhile, in Christchurch – you could find properties with a rental yield of 5.2%.1 So, if the rental yield was a key consideration for your investment and serviceability, Christchurch might be a better place to look.
The property you get for the price you can afford can also vary significantly across New Zealand. What could get you a 4-bedroom, 2-bathroom standalone property in Christchurch might only get you a 2-bedroom, 1-bathroom townhouse in Auckland. So, if you have a preference for the type of property you’re interested in, that could impact where you’d be looking to buy.
When it comes to location, deciding where to buy an investment property will have less to do with how pretty or desirable a location is to you – and more about how desirable the location is for your future tenants, and how the property’s financials fit in with your investment criteria.
Things to consider will be:
At Momentum Realty we source our investment properties from areas where – based on the data available at the time – we continue to expect population growth within the region and continued investment in council infrastructure and amenities. We also select properties with a rental yield of above 3.5% – and many of our properties come with rental guarantees.
When you select a property through Momentum Realty, whether the location is good for investment is one less thing you’ll have to worry about, as this is something we’ve already done for you.
Disclaimer: This post is intended for informational purposes only and does not constitute advice when it comes to selecting an investment property. Data is current at time of writing, but is subject to change as market conditions change. Past performance does not guarantee future performance and every investment – including property – comes with risk. When considering whether a property is right for your financial situation, we recommend you speak with a financial adviser.
While property investment may seem simple from the outside, there’s a lot that goes into buying the right property and making sure you can hold it through the fluctuations of a property cycle. In this guide, you’ll find everything that you need to know about what makes property such a powerful investment option, and how to make sure you buy the right investment property to meet your financial goals.
Click here to download the New Zealand Property Investor Handbook by Momentum Realty.