Should You Purchase Property on a Main Road?

https://www.youtube.com/watch?v=jh8shHRe-_Y&ab_channel=OnProperty

It is almost always cheaper to purchase property on a main road than a quiet street in the same area. But as an investor should you buy in a main road to get into the area or should you avoid main roads at all costs?

In this episode I talk with Ben Everingham, buyers agent from Pumped on Property, about the pros and cons of purchasing on a main road.

0:00 – Introduction
0:30 – Why you shouldn’t buy property on a main road
2:53 – Price growth differences between main road properties and quiet street properties
4:20 – Investing in main roads can still be a decent investment
5:50 – Choosing a neighboring suburb
7:30 – What is a main road

Transcription

Ryan 0:00
properties on a main road usually almost always sell for cheaper than properties in the same area in a quieter Street. And that can allow you to get into a suburb that you might not otherwise be able to get into. But when investing in property, is it a good idea to buy on a main road? Or should you steer clear of them? So Hi, I’m Ryan from OnProperty, helping you on your journey to financial freedom. And I’m joined by Ben Everingham, buyer’s agent from Pumped on Property to talk about this topic, in particular, because it comes up a lot when we’re looking at properties. And when you’re searching for properties for clients, and for yourself. So should you buy a property on a main road?

Ben 0:36
It’s a flat out no for me,

Ryan 0:38
okay, in the video, we will, we will go into it in more detail. It is a maybe. But let’s talk about you know why you’re a no and some of the reasons for that, you know,

Ben 0:49
one of the biggest reasons for me is I don’t have an endless supply of money. And I’m young, I’ve got young kids, and I want to be making great choices with the, you know, small number of properties I’m going to buy in my lifetime. So let’s say I have a million bucks, and I choose to buy on a main road in a great suburb that gets me a 4% return for 15 years, versus a quieter Street, that gets me a 6% return because it’s more of that mom and dad owner occupied field over that same 15 year period, I’m about 500k better off. So as soon as I started to look at the numbers I went, I’m gonna do the things that have a higher than average chance of setting myself and my family up faster. And main roads aren’t everyone’s cup of tea. So I don’t want to polarize myself in the market.

Ryan 1:34
Well, that’s when someone’s looking to rent a property or when someone’s looking to buy a property to live in themselves. So not necessarily looking as investors, main roads are going to be a big concern for a lot of people, obviously, because of the noise pollution primarily as well as like dust and grime. And everything that happens. And just livability going out onto a yard or onto a balcony when you’re on a main road as far as coming past, or even trying to sleep in in the morning when you’re on a main thoroughfare is really difficult. And so the issue with that is, when you are selling your property, you want to appeal to the broadest market possible because the more people you appeal to the the higher chance you got people getting into a bidding war and pushing your property up and properties that aren’t on a main road are just more desirable in general. And then going to as Ben said, over the years, those are the properties that tend to increase in value more the ones on the quiet street, versus the ones on the main road might not grow by as much. And while the price difference might be small. Today, you’re looking at 50 grand difference or something like that, when you extend that out over 1525 excetera years, that price difference can actually grow exponentially and end up being a huge difference. So investing that little bit extra can get you a huge growth down the line. I think you’ve got a story about someone Yeah, what happened,

Ben 2:55
I’ve got a couple like I built a place on a main road a bunch of years ago fit purpose built for Airbnb, and then something happened. And I decided that To try and sell it and the feedback I had like the property presented so beautifully. I got literally like 300 people through. And the feedback from every one of these people is if this wasn’t on a main road, we’d pay 300. More for an artist, right? Oh, my God, like that was within 12 months of setting it up. Yeah. But my mom and dad is even better story like they bought in a nice quiet street in Sydney 25 years ago. And you know, that value of that home today would be 1.5 mil, versus a friend of my brothers Simon just bought in a neighboring street that’s on a busy road, similar type of home for 950k. So as you said, that gap stretches over time. And you know, I don’t know about you guys, but if I’m raising a family, I’m thinking about safety. I’m thinking about noise. I’m thinking about like different types of people. I’ve got a lot of investors that we both work with Indians and Asians from around the world. And there’s just a lot of stuff culturally there where certain roads don’t make sense, certain orientations don’t make sense. And as Australia changes, like I want to appeal to the biggest possible market. And if I’m wiping out the international market, as well as like the mums and dads who have I got left,

Ryan 4:19
we got less left. Now that’s not to say that investing in a main roads going to be a bad investment or losing money. Because even going back to that story of Simon’s friend who bought it for $950,000, I could bet your bottom dollar that 15 years ago that was worth way less

Ben 4:36
than that. Okay.

Ryan 4:37
So while the gap is big today, back then, you know, you can still make money in it and you can still rent out those properties, you can still get rental return good rental returns, sometimes a main road can get you a slightly better rental return than in a quiet street because you got to pay that premium for the quiet street. And so that might appeal to some people. So it’s not to say that it’s bad to invest on a main road. It’s just when you’re an investor, you can choose to be picky based on your long term goals. So it’s not okay, I want to live in this particular suburb because it’s emotionally beneficial to me or it’s near work or the kids schools and I can’t afford to get in. So I’m going to buy on a main road. If you’re purchasing as an investor, you’re looking at, okay, where do I want to be in the future? Where do I want to be long term, and does this line up. And sometimes you might have to exit this other because you can’t afford it unless it’s on a main road. But there’s going to be other suburbs in that same city that are going to perform just as well as that’s other. But you can get a property in a better spot, that’s going to be easier to rent, that’s going to appeal to more owner occupiers that’s going to hopefully give you more growth in the future. So you can choose to be picky. And you don’t, you don’t have to get tunneled into,

Ben 5:49
I love what you just said, because I was just thinking in my personal situation, I would 100% choose a neighboring suburb that’s of lower quality today, close to the city or the beach in like a per through Sydney and Adelaide and Melbourne. But I would be going for that knowing everything I know versus like the slightly high quality suburban on the main road as a business. If it’s on a main road, we won’t even go and inspect it. So that’s just a rule of thumb that we’ve got to protect ourselves and our clients from that future downside.

Ryan 6:19
So you and the team have Pumped on Property bought about $250 million worth of property for clients. How much of that would you say is on a main road zero

Ben 6:28
on a single property, because I’ve made that mistake 10 years ago, myself, unfortunately, I made that mistake again a few years ago, where I was just, as you said, so tunnel vision around a certain strategy that I forgot some of the other fundamentals. And I learned that lesson the hard way. But these fundamentals do stack up over time and get above average returns. So

Ryan 6:47
it can also come down to decreasing your risk. So the way we approach property and investing is okay, what are red flags? How can we decrease our risk so that, you know we go through so many different things to do with a market, city suburb, the streets the property, we want to decrease our risk as much as possible. So if anything happens in the market, or in our life, we’re covered. And this is a main road we just see as another risk. That’s just not worth taking when there’s so many neighboring streets that have great quality properties, that instead it’s like,

Ben 7:20
Man, you make me feel bad about these places. I’ve still got to ride but I do love the property. It’s yielding? Well, it is slowly increasing in value and, you know, lesson learned again.

Ryan 7:31
So yeah, should you invest in main road, you know, maybe but Ben, obviously, he thinks not, doesn’t invest himself in it doesn’t investment clients, I’m kind of in the same position myself. It’s just something that if I saw a property was on a main road, I would just discard it, and not even look at it, and just focus on the things that are in the quiet. So we

Ben 7:48
talked about what a main road is because like my version of main road might be different, like properties on highways. And you know, well, that’s

Ryan 7:56
the thing. I’m in Sydney now, up here on the Sunshine Coast to him this little side street where three cars drive past every main road. No, it’s situational. And it depends because if you’re in the inner city of Sydney, what’s the main road versus not a main road is very different. So you’ve got obviously the massive thoroughfares and things like that with huge noise pollution. In the inner city, Sydney, you’re going to have noise pollution everywhere. So that’s very different to then moving back out of Sydney into the suburbs, or even Brisbane in the suburbs, or Sunshine Coast. It’s really contextual to the area as to what’s classified as a main road versus not, but you’ve got obviously your highways, then you’ve got your more like main thoroughfares through like towns or through areas, bus route your train routes, like that’s the sort of big picture stuff we’re thinking about. And just the gut feel like if you’re sitting there and you know, there really is only four cars in our game,

Ben 8:52
I still feel like it’s easy for me. But it’s like, I grew up in a cul de sac versus like someone else’s used to a bus route that’s completely accept. And

Ryan 9:01
I know there was an experience you had about a year ago, where you looked at a property and everything checked out, it was down in Brisbane. And so you drove down there to check it out. And when you drove down there, you realize at that point in time, it was a main road and you didn’t realize so looking at Google Maps, looking at Street View, you didn’t realize how much traffic was on this road didn’t look like a main road, but then actually sitting there out the front of the property. You can see the cars go go pass you can see the noise pollution, you can see what the rest of the suburbs lock in so you can get a feel for it there. So sometimes being on the ground will allow you to see it whereas sometimes you get to from the street view. Okay, this is this is a six lane highway, pretty sure that’s a main road, not a cul de sac, but

Ben 9:44
I just got myself caught on that recently, like I was looking for another knock down on the sunny coast and the only piece of land in like six months came up and I’m like, it was next to a highway. But it wasn’t on the highway and there was like a huge stretch of like bush and I’m like oh that’s acceptable. And I was playing around with the numbers and flirting with the idea. And then the agent is like, Nah, come and have a listen. And I’m like, okay, like, you know, went there and I’m like, this is actually horrible. Like it was so busy, but it looked like a quiet treat. So it’s just sanity versus logic and making a decision for yourself.

Ryan 10:17
Yeah. So ultimately it comes down to you what you decide to do, whether you should invest in a main road or not, we’ve given our opinions on it and what we think decreasing the risk, hopefully increasing your chance of return by picking a quiet area and everything in your truck going. Now, that’s the only one. But we hope this has been helpful to you. So we wish you the absolute best out there in your property journey and until next time, stay positive

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