One of the questions I get from my clients is, ‘How to Identify The Best Suburbs to Invest in?’ The challenge we all face is that we are busy daily. Studying the real estate market is a job for a professional.

I wholeheartedly agree—the time it takes to research the lending options available takes up quite a lot of my time. It also saves my clients time.

When we only look at a market from time to time – we are only likely to hear about the places that have been hot already and have used up their growth potential. But those locations often give us a clue about where to look next.

Many data points should be reviewed when determining where to buy an investment property. Things like time on the market, number of sales in the area, rental vacancy rates, etc., are important factors. One method of location selection is called ‘the ripple effect,’ and it is commonly used to find the next ‘hot spot’.

The basic theory is that if you hear about a hot suburb in the mainstream press, you should assume that investors have already made a lot of gains there. However, because the area is hot and prices are high, you can expect a lot of buyers to decide to look at the next 2 suburbs out because they are nearby but haven’t seen their value shoot up (yet).

Then, you buy your investment property there and wait as the market follows the same trend. It’s quite a reliable pattern; however, there’s no guarantee that just because one location has shot up 20%, the adjacent suburbs will shoot up the same amount.

I know we started this by acknowledging that most investors are going to be time-poor. This means that we won’t be able to spend hours poring over maps and determining which suburbs are hot.

Corelogic has an online tool that can help you: https://www.corelogic.com.au/our-data/mapping-market. If you go there, you can use the 3-month and 12-month value change features to spot locations that are rising fast and then look for nearby locations that haven’t had any dramatic price changes.

Then, you can shortlist potential suburbs to look for good investment opportunities. You need to do your due diligence but it certainly makes shortlisting properties to analyse much easier.