Purchasing a good development can help you gain a positively geared property for your portfolio.

Here are some factors you should consider in your research and due diligence.

Location

The most important factor in real estate is always location and the closer the development is to the CBD, the better the chances of a good investment if the price is right.

Additionally, being close to amenities such as education, transport, medical, recreation and shopping will drive demand, so be sure to check what’s nearby.

It’s also a good sign if the development is far away from industrial areas and noise. This includes being too close to highways or just noisy neighbourhoods.

Reputation

Does the developer have a good reputation and are they proven?

A good indication is if they’ve created successful developments previously in the nearby area. A little research here will go a long way.

Suburb Statistics

Some important suburb statistics to look for include the following:

1. Population growth
2. Income & demographics
3. Infrastructure investment
4. Capital growth investment

If there’s high population growth in the suburb, there’s likely to be high demand for housing and increases your chances of having a constant lease once the development is complete.

High demand will also drive up rent prices.

The higher the disposable income of the population in the area, the more likely they will be able to afford the current rent in the area and any future increases as dictated by demand.

Another important aspect is to make sure the development matches the demographics of the suburb.

There’s no need for luxury apartments in a suburb with low income as an extreme example.

Stock Available

Not all units or houses in a development will be of equal value. Some will be better located, have a better view, facing north etc.

This in itself is not a problem if they’re priced accordingly. But sometimes you may find that all the best properties have already been purchased and the remaining stock which is not quite as good is almost for the same price.

That’s why it’s good to get in early if you have done your research and due diligence and believe the development has good potential once completed. Some developments may offer discounts for early buyers too.

Competing Developments in the Area

A thriving population will require more housing and drive up prices. However, developers may quickly move in and flood the market with additional housing which creates oversupply by outstripping population growth.

This results in market prices falling, sometimes rapidly.

See what’s happening in the area, how many developments there are currently and if there are any more planned in the near future. This may also lead you to find a better development than the one you’re currently interested in.

Real Estate Investar members can use property investment tools and data including RP Data and Archistar to help find and analyse development sites.

Learn more by registering for a demo on our property investment platform.