Property hot spots and outperforming the market

We often have people contact us for our thoughts on the latest "hot spots", sometimes just before they jump in with both feet.

First off let me say that there's nothing unusual about wanting to make a profit or achieve above market average growth.

What we have found is that most people want to know exactly where the next property ‘hot spot’ is going to be. You know, where prices are expected to jump suddenly giving buyer’s almost ‘instant’ growth shortly after they purchase. 

Our advice is don't get caught up in the hot spot myth. 

The reality is that often this so called ‘hot spot’ information is based on rumour and hearsay spread by developers or some organisation that either has something to gain or a lot of property in the area to sell.

While there’s no harm in checking out an area if it’s labelled as a hot spot, don't let greed or the possibility of 'getting in before the rest of the market' cloud your judgement. In most cases once the media or general public start talking about a “hot spot” most of the quality deals have already been done.

If once you've completed thorough due diligence and it turns out that the area does appear to tick all the boxes and appears to be a sound investment then go for it. However the majority of hot spots we have checked out (usually in response to a clients' insistence on wanting to buy there) have turned out to be average at best and more often than not under-performing or have seen the best of the growth they were going to get already for some time.

Be mindful that even if the hot tip is correct and values in the area are likely to rise, there are still going to be good, average and below average property in that market so make sure you do your homework to determine what to buy rather than just grabbing anything that’s for sale. There are no short cuts to a quality property purchase. Property selection is vital.

Buyers who skip the research and jump into the hot spot rumour do so at great risk.

We have developed an approach over the past decade that isn't very sexy, but it outperforms the market average meaning people can - if they choose - on-sell their property quickly for a great price no matter what the market conditions or always find a quality tenant quickly at a great rent. 

If you'd like to find out more about our approach on choosing investment property that outperforms the market average click here to send me an email.