Cash Positives in Regional Areas
Generally speaking, a direct cash positive will be found in regional areas where the demand for ownership of properties is not necessarily as high as in the major cities. What you need to look for is a regional area that has a consistent, strong demand for rental properties and where the relative purchase price is low.
CAUTION . . . make sure the regional area you choose is large enough to sustain an ongoing community and it is not solely affected by any one industry downturn.
Some of the due diligence you should do when investing in regional areas include:
- Investigations into the population of the town
- Its major industries
- How seasonal are these industries?
- What is the likelihood of any potential downturn in these industries?
- What is the expected growth of the town?
- What is the historic growth of the town?
- Are there any external forces that may affect the town?
- What demand is there for rentals in the area and what types of properties are in demand?
- What is the historical capital growth rate for property in the town?
- Is there an over/under supply of rentals available?
Clearly, investing in this type of regional property means that any growth will not be as great as one located in a much larger city.
We always recommend that you seek professional advice as this blog is for general information only