About the author
Jane Slack-Smith has been named one of the Top 10 Property Experts in Australia by Money Magazine, one of the Top 4 Financial Influencers by Qantas and been awarded the Australia’s Mortgage Broker of the Year twice.

Location plays a huge role when completing a strategic renovation for profit. An amazing property may not sell if it’s in the wrong area. Here are some tips on finding the best renovation hotspots.

Location may be the single most important factor to consider for investors.

A property’s location plays a huge role in the amount of demand you get when you decide to sell or rent the property. If the property isn’t near to any amenities or useful infrastructure, you can expect lower offers.

The audience demographic also plays a part. It’s possible to buy a property that’s great for a particular niche of the buyer or tenant pool. But if those people aren’t interested in the location they won’t offer for the property.

This is an issue that trips many investors up. They buy a great property only to find that its location works against them. All of their work counts for nothing and some even have to sell for a loss. This is especially the case if they’ve made extensive renovations.

You need to avoid those mistakes, which means picking a renovation hotspot. Before getting to the tips, let’s examine the story of an investor who got it right.

The Case Study

Stratton is a member of the Your Property Success community. He also used our advice to invest in a renovation project that achieved fantastic results.

Best of all, he achieved those results in just six weeks.

His renovation work focused on opening up the living spaces and modernising both the kitchen and bathroom. However, the true masterstroke came in how he selected the right location.

Stratton used a suburb selection tool called ‘the dot map’ to provide a visual representation of all of the capit growth data he collected for the location.

The Dot Map is designed to uncover the Ripple Effect. This effect is evident when certain suburbs or areas have experienced highly sustained growth over a 10-year period and may have created a squeeze effect onto their neighbouring suburbs.

By looking at these neighbouring suburbs (which you can afford), you are, in effect, researching the next great area that will grow in value.

This top-down view gave Stratton an at-a-glance read on the location. With enough of the right coloured dots in the right places, he settled on the location that he wanted to invest in.

Stratton bought a property in Queensland with the intention of renovating for profit. Thanks to his dot map, he’s also chosen a hot location.

In just six weeks, he increased the property’s value from $500,000 to almost $600,000.

All told, he only spent $52,000 to achieve that result. That’s a $48,000 profit for six weeks of work.

However, Stratton instead chose to rent the property out. His work increases the rent from $340 per week to $440.

None of these increases would have occurred if he’d not started in the right location.

Now you need to know how to emulate his success and find a renovation hotspot of your own. Here are five tips to get you started.

Tip #1 – Don’t Get Bogged Down by Research

Research is a crucial part of any investment decision.

But it’s possible to go overboard when researching. You may spend all of your time analysing data in property magazines and keeping tabs on infrastructural plans. You could even pull data from the Australian Bureau of Statistics.

But eventually, all of that information will overwhelm you. You’ll experience something known as “analysis paralysis”. This occurs when you’ve focused too intently on collecting data and have no idea how to use it.

Analysis paralysis can lead to you missing opportunities because you’re so bogged down by research.

Stratton’s use of the dot map helped him to avoid analysis paralysis.

His research into the suburb told him everything that he needed to know. As a result, he could seize an opportunity when it presented itself.

Create a list of the factors that will prove most crucial when selecting a location. This can include figures related to target audience and nearby features and amenities.

Simplify that data and make decisions based on it. Trying to get every possible fact or figure will slow you down and place you in analysis paralysis.

Tip #2 – Set Investment Goals and Determine Your Strategy

Every investment starts with a strategy.

You need to know what you aim to achieve, both in the short and long term.

Start by setting a long-term goal. Figure out where you want your portfolio to be in five years’ time.

To do that, you need to set financial goals. With your timeframe set, you can then consider your savings, income, and personal risk tolerance.

The key is to create a plan that ensures you only buy what you can afford. This may mean purposefully missing opportunities because they cost too much. But other opportunities will come along and you’ll eventually reach a point where you can take advantage of them.

When you’re starting out, it’s all about creating a plan that suits your personal circumstances.

With that plan in place, you can create a shortlist of locations. Anything that falls outside of your budget gets put to one side for another day.

This means you avoid the temptation of spending beyond your means. For novice investors, it’s that failure to control their spending on their first purchase that often spells disaster.

Finally, create an exit strategy. Nothing is for certain in property investment. You may do everything right only for some unforeseen issue to ruin everything. Figure out how you’ll exit the investment if things go wrong.

Tip #3 – Start with a Map

Stratton points to the dot map that he created as being one of the most important tools he uses when selecting a location.

With his dot map, quickly identified hotspots he could then research further. This allowed him to disregard areas that may not have the growth potential he was after.

It’s also much faster than the alternative.

You could spend all of your time driving around the streets to get a sense of the location. This can certainly prove useful. But it will take you hours, or even days, to see everything that you need to see to make a decision.

By the time you’re finished, the opportunity may disappear.

That’s not to say the map alone offers enough information for you to make a decision. You still need to work on it so that it tells you what you need to know.

Tip #4 – Know Your Market and Demographics

This is where you come back to your budget and strategy again.

There are plenty of properties that offer the potential for investment. But they need to meet your goals, budget, and borrowing capacity to be of any use to you.

This is particularly important when doing a strategic renovation for profit. Buying the property is only the first step in these cases. You then have to consider how much you’ll spend on renovating it and which renovations you need to appeal to your target market, this needs to be calculated before you even buy.

Work out who the property needs to appeal to and then look at the local demographic information. Is there enough demand for the property type that you’re considering? Can you meet that demand while sticking to your strategy?

If you can answer “yes” to both questions, you’re one step closer to finding a renovation hotspot.

What to Do Next

Stratton achieved a remarkable result because he followed the Your Property Success strategy.

In particular, he understands the importance that location plays when you’re renovating for profit. The quality of the property isn’t the only factor. You need to collect the right data without getting stuck in analysis paralysis. You need goals and have to understand how to eliminate suburbs from your list if they don’t meet those goals.

Finally, you have to choose suburbs that offer growth potential and the right market demographic.

This article offers a taster of the tips that you can put into action. But there’s so much more to learn. Register for our webinar to discover how to put these tips into action.

Click this link if you would you like me to personally help you with your investment strategy… one-on-one… For free.