There’s no question that your first investment is crucial to your long-term success as an investor. Naturally you want to get it right. You want to buy in the right suburb at the right price.
As a beginner investor, there are a number of things you need to familiarise yourself with, including jargon, data and many other things you need to learn in a hurry.
You also need to research the area where you intend to invest. This can be a time-consuming process. You should learn everything about the suburb that could impact on your investment. You need to know which streets are the best and which ones you should avoid. You need to know who lives in the suburb and what’s in high demand in terms of property. With so much information you need to know at the start of your investment journey, you may be wondering if it’s a good idea to just buy in the suburb you live in while you’re learning the ropes.
The biggest advantage of buying where you live is your intimate knowledge of the area. You already know everything about your current suburb. You know which streets are the best (or worst) as well as the type of people who live there.
Your in-depth knowledge of the suburb will dramatically cut down the time you need to spend researching and give you the confidence to move forward.
When you’re researching a new suburb it can take at least three months to really understand it. If it’s located interstate, you may even have to take a couple of trips to check it out.
By looking in an area that you already know, you can focus your energy on learning other aspects of investing. You can also avoid the analysis paralysis that can occur when you get overloaded with information and are unable to move forward.
While there’s compelling reasons to consider buying in a suburb you’re currently living in, there are also some potential downsides. You’re essentially putting all your eggs in one basket. You could also buy emotionally, because of your affinity with the suburb, which could possibly mean you are prepared to pay too much.
So should you buy in the suburb you live in or not?
There’s a good argument for cutting your teeth in an area you know best. If you’re currently living in this suburb, chances are there are things you like about this suburb, and there are features that appeal to you. And chances are these characteristics would appeal to others too. By buying in an area that you know by heart, you’re able to pick the best location at the best price. Just remember to watch your emotions and ensure your suburb has potential for future growth.
by Nila Sweeney, writer for realestate.com.au