- Investors may feel more ocmfortable investing in or near where they currently live
- This shouldn't be the case
- Property investors should diversify their portfolio, to increase exposure to different locations , property types and other factors
Most first-time investors traditionally seek out and purchase their first investment property in or around their principal place of residence.
This is a normal human tendency to deal in an area you feel comfortable with, but it doesn’t always make good business sense.
Good proportions of suburban areas are simply that – suburban areas.
Whilst they could be great places to bring up a family it doesn’t necessarily make them good investment areas.
You must have the understanding that any investment in property, in any location, will be a good investment for the long term.
Whilst this is true, it should also be noted that some areas will give far better capital growth i,e riverside, oceanside or city localities will quickly outstrip most other areas.
The other fact is that you should be attempting to diversify your portfolio, like you would for a stock market portfolio.
Therefore, purchasing an investment property in a completely different location to your principal place of residence makes strategic sense as you build up a diverse portfolio, exposing yourself to other factors, locations and property types.
Your portfolio should also include different types of properties ranging from small units, new apartments, houses or developable land to commercial property. Such a diverse range of properties would be generally harder to find in your own suburb.
Whilst you are already exposed to the suburb your home is located in, it makes good business sense to spread your investment dollars over different regions for both the long and short term.
