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Property Investment and Location: Making the Right Choice

— September 14, 2021

When selecting a rental property to purchase, one factor is incredibly important. What you should be thinking about from the very beginning is the location of the property. There are so many reasons why the location of the rental property you choose to buy is important and how it can impact your investment success. 

The following tips discuss just how important location can be when buying a rental property and how to go about choosing it.

1. Why location is important?

There is one crucial reason why the location of your rental property is key as it will have a direct effect on your tenant pool. 

If your property is situated in a business district, you might draw in city workers, for example. The property might be located near a high school, which might attract families and their older children, who will need a local school to attend.

In summary, in the same way, that different property types — such as strata properties or apartments will attract different tenants, so will the location you choose. So, if you plan ahead, you can get an idea of which tenants are likely to be interested in your property based on the location. Here are three ways you can do this.

2. Consider the rates of vacancy in the area

You should start by thinking about the rates of vacancy in the location. The rates of vacancy indicate how long a property remains vacant or without tenants for a certain period of time. 

The lower the vacancy rate in the area you select, the better. This will benefit you, as it can be taken as a sign that your property will be full for the majority of the time. Try to avoid the mistake of choosing a location with high rates of vacancy which can be taken as a sign that it could be difficult to get tenants for your property.

3. Strategize for the future

You might not have a crystal ball, but strategizing for the future in terms of the location of your property is a smart move. To be more specific, choosing a location that your tenants are likely to find favorable is important.

To achieve this, you should try to keep an eye on the potential positive changes that are likely to happen in the area. Positive changes might include new amenities that attract people to the area such as:

  • Shopping districts and retail stores.
  • New builds and property.
  • Extended transport links.
  • Supermarkets and schools.

If there are developments planned that are going to happen in the area, this can have a significant appeal to prospective tenants.

Man with shopping bags and camera; image by Erik Mclean, via
Image by Erik Mclean, via

4. Choose an area that you know well

Finally, the third way to select a location in which to purchase a rental property is to select a location that you know well. This will give you the upper hand, as you will already have knowledge about the area, it’s more likely that you’ll be up to date with the developments in the local area and you will know which locations are crime-free and have the best amenities.

What factors to avoid when choosing the location? 

There are also a couple of things to avoid when selecting a location to purchase a rental property. Here are the two factors to consider during the process of selecting a location.

Forgetting to visit or analyze the area

In the event that you are not familiar with the location, you are choosing, visiting the area is a must. This is an unavoidable step, and it’s essential. There is nothing worse than selecting a location and then realizing that the property tax rates are incredibly high, or that the crime rates are high.

Really carry out the research required to gain familiarity with the area – which includes speaking to locals and actually going to the location you are interested in.

Failing to consider your target demographic

Your target demographic should be a part of your plan to strategize for the future. Each area will have it’s own demographic (such as families with children, or students), and it’s up to you to discover what your target demographic prefers in terms of a rental.

Doing this can help you avoid buying a property your target demographic doesn’t want.

Get the location right

Selecting the ideal area can be a challenge, but it isn’t impossible. To choose the right location, remember these hints: 

  • Think about your target demographic.
  • Strategize for the future.
  • Choose a location that you know well.
  • Visit the area and do the research required to know more about it.

Using these tips will ensure you get the location correct and avoid any potential issues going forwards.

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