Should You Buy An Investment Property Close To Where You Live?
a lot of investors especially newer investors want to purchase an investment property near where they live there’s a lot of benefits to that but there’s actually a lot of risks and negatives associated with that as well so if you’re wondering should i buy a property near where i live or should i invest somewhere else today i want to give you some pros and some cons to help you think about it and make that decision for yourself hey i’m ryan from on property helping you on your journey to financial freedom and i remember growing up as a kid my parents wanted to invest in property and so they looked within the very suburb that we lived in so cronulla here in sydney beautiful beachside suburb they had purchased their own home in the area they were looking to buy an investment property and they ended up purchasing a unit in cronulla they owned it for a couple of years i think it was negatively geared ultimately they ended up selling the property at a loss unfortunately and didn’t make any money off it now that’s not to say that happens to everyone a lot of people invest near where they live and have great success but how do you know whether you should invest near your home or not what are the benefits of doing it what are the negatives of doing it and why do so many investors go to other suburbs or other cities or even interstate in order to build their investment portfolio so let’s talk about that first let’s talk about the pros which are probably a bit more obvious one of the benefits of investing near where you live is that you know the area and we will come back to touch on this in one of the negatives because you know the area and what it feels like you know where the good streets are you know where the housing commission is you know where the good cafes are and all that so you’re familiar with the area chances are you like the area and you like living in it and other people do as well so there’s a benefit there in that you know the suburb but one of the negatives which we’ll come back to is just because you know the suburb from living there doesn’t mean you know the data associated with that suburb and how it’s going to perform in the future just because you want to live there doesn’t mean that that suburb is going to grow in value into the future but you do know about it you can avoid some race because you know about the suburb itself other benefits of it that it’s quite easy to inspect properties because they’re very close to your home you don’t have to go very far on a saturday or after work in order to inspect them and it’s also possible for you to check in on your properties i think this is why a lot of people want to invest near their home so that they can check in on it actually the street that i’m in right now there there’s a guy in this street who owns a house just you know one or two down there and he actually bought the house across the road so right across from me now so he he owns both and he’s rented it out and he can see what’s happening in that house now finally he’s going to develop this property and so it’s been rented out to a bunch of let’s just say youthful boys and some questionable things go on at that house but he’s just renting it out until he’s going to knock it down and develop a i think jewel or triple occupancy home there so like a duplex and a granny flat there but yeah he owns in the street every single day he can see what’s happening at that house that’s an extreme example if you can check in on your property and so that might help you sleep better at night knowing that you can drive past it and see you know doesn’t look in decent condition and maybe that would help you to avoid some of the issues like ben had if we talk about ben’s property horror story which is absolutely hilarious i’ll link it up down below and i’ll put like a snippet in here so you can hear a little bit about his horror story three weeks ago i get a call off a mate who’s living in sydney um and he’s like turn on the local news and i’m like what local news i live in queensland man he’s like i just turned on the central coast news and i just saw your property i think you could call your property you know the footage was from like a crew on the ground and a helicopter type thing just to set the scene for where where this is going um so i’ve called my property manager and she’s like yeah i was gonna call ya um something’s come up um effectively the saturday before i got the call um some police were called to the house because apparently there was two illegal tenants living there that had actually had a knife fight like this is how it started like i’m like where are we eliminated like this is a knife fight um so they’ve had a knife fight and they’ve busted up some windows and the neighbors have called the cops in and the cops have come in and must have seen some others just have some sketchy stuff some sketchy stuff um so they’ve walked into the property um and gone okay we have to come back so you know a couple of days later six detectives rock up with the drug squad and have gone to break gonna break the door down effectively and you know have warrants for people’s arrests in the house um during that time of knocking on the door for some reason the granny flat that’s been there for 15 years catches on fire catches on fire um calls undetermined by the police and the fire department so no one knows how caught on fire yeah um you know timing-wise logic would say to me um and so these cops have effectively gone to end of the property and couldn’t because the granny flats on fire so they’ve caught two fire engines they’ve come out put the fire out and then they’ve sectioned off the street and the cops have gone into the property and there’s eight adults living in the house apparently like heavily drugged up let’s just say that they’ve all gone running and the police have managed to catch four of them so they’ve got them in handcuffs next to the cop car i didn’t realize but the neighbors have all been in conflict conflict for a significant period of time apparently like my property managers never told me any of this stuff so i’m like obviously something’s been going on that you know just we had no idea about effectively and um basically guys in cuffs and one of the neighbors gets a fence paling and another one gets a cricket bat and then they start attacking attacking people like that are completely cuffed up and you know the cops have had to call for backup all of a sudden there’s like 15 cop cars and like 40 policemen there and everyone in the street has now begun fighting police fighting the tenants oh my god like just a full-blown riot and that’s where you hurt up too right yeah so yeah ben had this property on the central coast that ended up being i think a meth lab or something they burnt down the granny flat oh he just had a nightmare with that property if it’s close to home if you can drive past it you can start to see some of those problems earlier really a real estate agent should probably pick up on that anyway but being close to home you can start to see that and also there’s the benefit of is if there’s minor issues with the property you may be able to go and personally fix those issues yourself so maybe it’s plumbing issues maybe something needs to be painted or something needs to be fixed rather than paying a handyman to come out in order to fix it you can actually go and fix it yourself i know my partner lives in a property and the property owner is in and around sydney and so he’ll come in and inspect the property himself every now and then she’s got a personal relationship with him he actually owns a kitchen company and so put in a new kitchen for her when he really didn’t need to the old one wasn’t that bad so she kind of got lucky having an owner who lives close and having a good relationship with him even though she goes through a real estate agent but he can come in inspect it see what needs to be done and maintain his property up to the standard that he wants it’s easier for him to do that than going into state so there’s obviously some benefits to investing where you live otherwise people wouldn’t do it but i think really when it comes down to it the benefits mainly are emotional based like you think about it you’re like okay yeah there’s these practical things that financially i don’t have to hire a handyman or i can check in on this sort of stuff or whatever but really i think it comes down to emotions you feel safer investing in an area that you live in because you feel like you know that area you feel safer investing somewhere you can drive past because you can check on it which helps you be less anxious about the property so it comes down to those emotions buying in an area that you live most of the time unless you live in an area and you know the data and can identify this is actually going to be a great area i think most people do it for emotions and if you’re thinking about buying near where you live have a think about and say okay am i actually fearful am i just investing in the area that i want to live because i’m anxious about investing elsewhere or i don’t know how to research anywhere if you’re feeling those feelings then maybe that’s an indicator to you not to okay be fearful of everywhere else but to say all right i’m understanding that i’m scared because i don’t know how to invest somewhere else then go and learn how to do that learn how to pick your markets learn how to do your suburb research learn how to you know work out what a suburbs like where’s the good spots find out how to discover where the public housing is like all of this stuff you can learn and it’s one of those skills that you build up that’s going to make you a better investor so if you’ve got those fears maybe channel those fears into actually educating yourself building up your property investment skills that can make you a more sophisticated investor and then maybe you apply that to your own suburb and where you live and you buy there anyway i guess another reason to buy in the suburb that you live is that eventually you may want to live in that home so you might buy it as an investment for now but maybe in the future you want to knock it down and build your dream home on that site or you know maybe you want to your kids to live in it i know my dad owns a unit that you know my sister is able to live in and so there’s some reasons around that as well but yeah find out if it’s emotional and then channel that into actually becoming better at researching suburbs so what are some of the benefits of investing in other areas what are some of the negatives of investing where you live kind of already touched on the fact that if you’re just looking where you live often it means you’re not looking at a lot of things and this is where people can really get messed up in buying near where they live because they’re just thinking about the emotional aspect they know the suburb but they’re not looking at it from a financial and rational and logical perspective because they’re just like i’m gonna buy where i live they’re not thinking anything about market cycles where is my city and my suburb at in its market cycle what has been the percentage growth over the last 12 months three years 10 years and what’s its average over a longer time period if you don’t know those sorts of figures then how can you know whether the market is at the top of the cycle or if it’s at the bottom of the cycle and about to boom it can be really difficult to know so buying sydney back in you know 2011 2012 great time awesome if you buy near where you live in sydney at that point in time great if you buy near where you live in sydney in 2017 mid 2017 when sydney kind of peaked and then you’re going to go through the next you know 18 months of a downward cycle you may not have researched and discovered that oh sydney’s actually at the top of its cycle at the moment which increases my risk so not doing that research can be one of the negatives of investing near where you live and that can be one of the benefits of investing somewhere else is that it’s kind of a different approach rather than just saying i’m going to invest in this suburb you’re not just picking suburb first you’re looking at all the markets that you can choose in australia and working out okay where are they at in their market cycles at the moment and where are they likely to go in the future so that’s that’s great for a start so then you’re picking the market that you think is at a good cycle two of the markets that i would heavily consider right now if i was going to invest would probably be brisbane definitely and perth as a maybe i think perth may have reached near the bottom of its cycle and be due for some sort of run and brisbane’s just had you know 10 to 13 years of just really slow growth kind of only really keeping up with inflation and not growing but the fundamentals in brisbane are pretty strong whereas sydney and melbourne have both had really good run-ups up to 2017 as well as in late 2019 they ran up before the pandemic and hobart has had an incredible run as well and so those three areas i’d be more nervous to but yeah so you’re looking at all of australia and saying okay these markets look like the best opportunity then you can zone in on those markets and you can research each of the suburbs and say okay which of the suburbs will look like the best suburbs for me with my risk match my risk profile or my rental yield or whether or not i can build a granny flat what are the price ranges of these suburbs do i think they’ll grow in the future and so rather than just saying okay i’m just going to invest near where i live you can be super laser focused and super specific on okay here’s my finances here’s my price range here’s the rental yield i want here’s the potential growth that i want here’s my risk profile and you can be like okay this market matches up with the market cycle this suburb matches up like for what i want in a property exactly then you can get to know that suburb from a data perspective really really well and understand okay what’s the best streets what’s the worst streets in that suburb all of that sort of stuff so you can kind of hand pick the one that you think is going to be the best financial performer and who knows maybe that will be where you live or maybe where you live is good enough that you’re like yeah okay right market cycle it’s got the right indicators for the suburb it may not be the best one out there there might be better ones for me but i’m willing to compromise on that and i think my suburbs pretty good so i’m going to go for it but at least you’ve done the research and chosen it because you think it’s going to perform rather than just saying like okay emotionally this feels good and i know this area so i’m going to buy here so doing your research can really help you to find a good area to invest in and this is often what would lead people interstate and to buy interstate and i did a great video with ben everingham on how can you purchase property interstate especially now where a lot of us aren’t able to cross state borders so i’ll link up to that down below if you want to go ahead and check that one out but yeah the benefits of that are as well like you don’t need to buy an investment property in an area that you would live it just needs to be in an area that someone would want to live you know that someone would want to rent or someone would want to own eventually when you go to sell it so looking in an area and looking at okay is there a high percentage of owner occupiers in this area is the vacancy rate in this area low what are the rental yields like if i want to build a granny flat is this the market for it are people looking for that sort of dwelling and would they be happy to do that and like you don’t have to need to live there i think my sister owns a like a house up in gateshead in in newcastle now i used to live in gateshead we moved up there didn’t know the suburbs really well gateshead is what we could afford it’s one of the not greatest suburbs in the area it’s right near charlestown which is a good suburb by the time i lived there probably a decade ago now there was a lot of housing commission in gateshead and it just wasn’t the greatest suburb and so my sister you know maybe she would live in gateshead i don’t know but maybe she wouldn’t but someone wants to live there because they’ve rented out their property and that person is happily renting there and i think has been there for a long period of time so just because you don’t want to live in the suburb doesn’t mean someone doesn’t want to live in the suburb and won’t pay you rent for the privilege to live in that house in that suburb so i think that’s a really interesting thing to think about as well and something a lot of investors have talked about is that there’s a lot of houses that they own that they would never live in that their standards are higher than that or they just don’t like that sort of area but everyone is different and there’s so many people and there will be people who want to live in it going into state you can you know take advantage of the cycles that we talked about pick the best suburbs you’re going to need to find a good rental manager i guess that’s one of the negatives that go interstate you can’t rent it out yourself you can’t check in on the property frequently yourself so you’re going to need to hire a good rental manager which truthfully you’re probably going to need to do anyway if you buy in your own suburb unless you’re renting out like a friend or family member want to do it yourself you’re probably going to get a real estate agent’s help anyway so if you get a good agent interstate then they can help you with the rent they can help you with any issues that come up they know all the handymen to call or the plumbers or whatever goes wrong they can do that and you can always fly into state when there’s not a pandemic and go and inspect that property yourself as well every now and then just to check up on it and to see what needs to be done i guess one of the benefits we didn’t talk about with buying near where you live is if you’re going to renovate the property and do a lot of the work yourself then being close to home so that you can go after work or you can go on the weekends is a massive positive whereas if you’re going interstate to an area far away it can be very difficult to renovate the property so it may impact the style of investing that you do or the strategy that you implement but yeah uh i don’t know if there’s anything else that we really need to cover i’m pro i’m pro investing in areas that are going to move you towards your financial goals property investing after all is for most people is a vehicle to get them financially where they want to be so maybe that’s financial freedom living off passive income so that you get choices in your life and do what you want your goal is not necessarily i want to own the house across the street that’s going to make my life so amazing and so happy imagine if i just owned the house across the street don’t get to live there i don’t get to go in it but i own it how good is that going to make me feel no like not really but if that house goes up in value if you’re getting good rent from that house then you can spend that doing what you want with your life and that’s probably going to make you happier because you got those choices that freedom that financial stability the wealth the passive income all that good stuff so i am pro properties that are going to move you towards your financial goals but i think rather than starting with your suburb start with your financial goals and what you want to achieve then look at okay what strategy is going to help me get there and if you don’t have a strategy check out my video on two properties to financial freedom where i outline a strategy where you can purchase two properties build two granny flats and build up a baseline level of financial freedom by paying off the debt and owning those properties outright super simple strategy that can be implemented by almost anyone so i’ll link up to that go ahead and check that out but yeah start with your goals then your strategy and then it’s like okay market timing good suburbs that line up with my strategy and then going from there and maybe you’ll end up in the suburb that you’re in or maybe you’ll end up investing somewhere else it’s completely up to you or maybe you just you’re so emotional and you don’t care about the strategy or you don’t care about market timing for you what feels most secure what feels the least risky is investing where you know and where you live and that’s completely fine i still suggest you do the research anyway so at least you know where your suburb is at in market timing and maybe it’s time to wait it out maybe it’s mid 2017 and you want to wait 18 months before you jump into sydney at least you’ve done the research and you know what you’re getting into and if that’s your decision then i wish you the absolute best of luck and i know a lot of people have had massive success doing that or even house hopping within their suburbs buying a house then moving to another house and keeping the one that they purchase and converting into investment property but it was where they wanted to live so there’s there’s pros and cons to each ultimately it’s up to you but i’m pro you achieving what you want with your life and getting choices in your life and that’s why i just encourage everyone to go out there and to do the research and to understand it if you need help doing market research understanding suburb research how do i look into a suburb how do i find the data in the first place what should i be looking at i do have a i do have a course called advanced suburb research it’s a paid course but i walk you step by step through each of the data points how to collect that data and then how to compare suburbs to each other so you can really find a suburb that suits your needs that’s low risk and got a good chance of getting you a return so go to on property dot com dot eu suburb if you want to check out that course i’ll also link it down below otherwise check out my video on two properties to financial freedom or check out the video that i did with ben on how can you actually invest interstate at this time thank you so much for tuning in i hope you enjoyed this discussion and until next time stay positive
Watch The Video:
A lot of investors want to purchase investment properties near where they live. There are a lot of benefits associated with that but there are also a lot of potential negatives too investing close to home. In this episode we look at the pros and cons of investing close to home vs investing somewhere else in Australia.
Advanced Suburb Research Course – https://onproperty.com.au/suburb/
0:00 – Introduction
1:27 – What are the benefits of investing near where you live
8:05 – The emotional benefit of investing close to home
9:17 – Learning how to identify good areas to invest in
10:34 – Negatives of investing near where you live
15:10 – You don’t have to invest in an area you would want to live
17:05 – Negatives of buying interstate
18:18 – Invest in areas that will move you towards your financial goals