How did you pick these places?
Step 1 – In our book, Wealth Plan, we show the 3 factors investors should look for when choosing a place to invest. They are:
- The property cycle (whether the area is undervalued or overvalued compared to the rest of the country)
- The expected population growth and
- The size of the population.
An undervalued area that expects considerable population growth (and already has a decent-sized population) … that’s a recipe for house price growth in the future.
Step 2 – But then we also need to consider factors like:
- How expensive properties are
- And the average rental return
An undervalued area that expects significant population growth (and already has a decent population) is good.
But if that area also has cheap properties, people who earn decent incomes (to support higher house prices), and good rental returns … that’s ideal.
Step 3 – Finally, you combine these numbers to build an overall picture of each region.
There’s no point in creating a formula that says, “a good location is 42.5% property cycle and 12.9% population growth …”
No one has ever created a model to accurately predict future house price growth.
So instead, the spreadsheet uses “heat maps” to show how each area compares for each factor we’re considering. ‘Red’ = good, ‘blue’ = not good). The redder, the better.