When I first started investing, I went to numerous property investment books and seminars to learn more. I was utterly perplexed by the fact that almost all of them were convincing.
Someone would show up in one of my client consultations and demonstrate that a particular property strategy worked for them just as I was about to form an opinion against it!
After putting many of these strategies to the test myself, I realized that the issue is not the strategy itself—which is just a tool—but rather how well the tool is used by the person at the right time, in the right place, and in the right way.
There is never a single suburb that is consistently the best place to invest.
If you choose a property in what you believe to be the best suburb at random over a 30-year period, you will find that there are times when it will outperform the market average and times when it will underperform the market average.
At the end of the period when it is outperforming the average, many property investors jump into historically high-growth suburbs and stay there for 5-7 years during the underperforming period. Naturally, this could alter their perception of property investing as a whole!
There will never be a suburb that is the worst place to invest.
If you choose a property in the worst neighborhood you can think of from 40 years ago and compare it to a property in the best neighborhood you can think of over the same time, you’ll find that they both increased over the long term at an average of 7-9 percent per year.
As a result, the average house price in Melbourne and Sydney in the 1960s was $10,000. The worst property at the time may have cost 30% of the median price, which at the time was, say, $3000. In these cities, the median home price today is approximately $600,000. The worst suburb is still about 30% of that, or about $200,000 for a house. Show me where you can still find a house in these cities that is still worth approximately $3,500 if you believe that a bad suburb will never grow.
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