Should investors look beyond their own backyard?

Your best investment opportunity might not be right on your doorstep and you may not feel entirely confident purchasing an asset outside of your local area, especially when visits to check up on it will impact overall returns. So, let's take a look at how to make investing a long way from where you reside work for you.

Man looking over fence
  • 31 October, 2018
  • Investing, real estate, property, Investors

Investors who are in search of both capital growth and positive cash flow – the winning combo – may well need to look beyond their own backyard.  Buying just up the road might give you peace of mind because you’re able to pop around to check up on it when the property manager or tenant requests, but convenience doesn’t always translate to a good business decision.  And at the end of the day, the reason for buying an investment property is to generate wealth.

The power of research

Buying sight unseen is an option, but it certainly carries a level of risk, particularly for the uninitiated.

With proper research you can pick the market, pick the locality and pick the entry point.  Failure to do your research thoroughly, however, and you might purchase at the wrong part of the property cycle or just before a looming economic challenge such as the completion of a major infrastructure project.

Being able to identify key growth drivers is a crucial part of the research and due diligence process and you will need to thoroughly research key drivers, such as employment opportunities.

Other ways to ensure you make a smart purchase

  • Take a video walk-through of the property
  • Get a thorough building inspection report with detailed observations and photographs
  • Discuss the property with a local property manager and get them to inspect it
  • Get a current rental appraisal
  • Speak to agents and local residents about the street and surrounding area

LJ Hooker NZ

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