Inspecting the area you want to invest in – Part 2

© Property Professor articles —
Reproduced with permission.

Last time I outlined two activities I undertake when visiting a suburb to help determine whether it is an area worthy of investment. (Click here to view the previous article). This week, I outline three more activities:

• Spend some time at the local shopping centre
• Have a coffee/meal at a couple of eateries
• Visit the police station

Spend some time at the local shopping centre
Everybody needs to go shopping at some stage so visiting a shopping centre can provide you with an insight into the sort of people that live in the region. Keep in mind that the bigger the shopping centre, the further people will travel to get to it so if you want an accurate cross section of the people that live in the immediate area, you need to visit smaller shopping centres e.g. neighbourhood shopping centres or the shopping strip in the main street. A large Westfield shopping centre will attract people from kilometers away, not just the locals.

There are a few things you need to watch for when you are at the shopping precinct.

• What types of shops can you see? Are there many “two dollar” and “bargain buy” businesses in run down shops? Are there up-market women’s clothing boutiques and jewelry shops in superbly fitted out buildings? An up and coming suburb will have a mixture of both. In the early stages of the suburb’s gentrification, you will find up-market shops replacing bargain buy shops but the buildings might still look run down. However, as more and more expensive businesses move into the area, more and more buildings undertake makeovers and renovations. For long term capital growth, you should be investing in areas that are in the early stages of gentrification.

• What sort of meat is the butcher selling? If it is just sausages and cheap cuts of meat, this is an indicator that there is not a high level of discretionary spending in the area. If there is a variety of expensive steaks and other cuts of meat, it is a sign that people in the area have money to spend.

• Wander through the newsagency. What publications can you see? Are they business and finance magazines, the “Australian Financial Review” and “The Australian” newspapers and expensive gifts or is it mainly local newspapers, soft porn and hotted up car magazines. A suburb that has newsagancies that stock expensive gifts and a wide range of glossy business and investment magazines is one that indicates a wealthier demographic resides in the area.

Have a coffee/meal at a couple of eateries
When visiting the café or restaurant, the best way to help determine whether it is a wealthy or up and coming area is to read the menu.

Go to a café on a Saturday morning at about 10:00am. Is it full of 25 to 45 year olds, reading the Australian Financial Review and twittering on their smart phones? Does the cafe offer just the basics; tea, cappuccino, flat white, caffe latte and hot chocolate or do they offer herbal teas and coffees such as affogato, macchiato and for the children, babycino. Don’t just check out the different types of tea and coffee but also look at the prices they charge. A café that has a wide selection of teas and coffees and relatively high prices is a reflection of the people that live there; an upwardly mobile demographic that have money to spend.

Check out the local pub on a Sunday afternoon. Is there a jazz band playing in the courtyard, a wide selection of imported/boutique beers on tap and a relatively high percentage of women, drinking wine? Or is it mainly VB and Tooheys on tap, horse racing on the big screens and not a glass of wine or woman to be seen anywhere. A gentrified suburb has more of the first type of pub.

Visit the police station
You can ask the police questions over the phone but if you take the time to actually go to the police station, you might also see the type of people that frequent the station. One of the main reasons you are seeking information from the local police is you want to find out which pockets are notorious for crime as they are the pockets you want to avoid. Not every street/block in a suburb is worthy of your investment dollar. Find out which are the less desirable areas and avoid them.

Happy House Hunting!

Written by Peter Koulizos, university lecturer, author and buyers advocate.

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