According to CoreLogic’s Investor Report 2016, investors own nearly a third of the country’s housing market.

But if you’ve yet to start your portfolio, buying an investment property can be slightly worrying if you’re not sure you’re making a good decision. Keeping an eye on the market can be key to making the right investment choice when you’re getting started in property investment.

Investing in property? Where should you start?

Location is everything, according to this recent RealEstate.com.au article which has some sensible property investment advice for newbies:

• “Property prices are determined by 80% location and 20% property”
• “Lifestyle drivers are the direct cause of some markets outperforming others”
• “An ‘average’ property in a great location is preferable to a great property in an average location”
• “Know which property type is right for the people living in that particular area”
• “Research the demographics – age, incomes, professions, family sizes”.

With this advice in mind it’s tempting to consider property investment in Melbourne because of the strength and consistency of the market. But while this is still a good choice, experts now say it’s regional Victoria where you should also be looking to invest your dollars.  

Regional hotspots in Victoria

The buoyant Melbourne market is causing a ripple effect in regional Victoria with median house prices starting to increase in outlying Melbourne areas, though more moderately than in the city, says Real Estate Institute Victoria (REIV) CEO Geoff White.

We take a look at 4 hot spots where investors are taking advantage of low prices and good rental returns to invest in property in Victoria:

1. Dandenong & Dandenong North

It was reported at the beginning of the year that the property market was picking up in Dandenong - a suburb 30km east of Melbourne. Local real estate agent Leigh Hall was seeing house prices increase dramatically and homes being sold after two open for inspections. He said investors were locals wanting to “invest in their own backyard”.

2. Geelong

Another solid seller they said was Geelong - 75 km southwest of central Melbourne. This peaceful bayside city had experienced a median price increase of 16.9% to $675,000.

The location is attractive for its community atmosphere and being within commuting distance to Melbourne thanks to faster train services. The Geelong bypass also significantly cuts commuting time, said Geoff White.

3. Torquay

A surf coast location with a commute of just under two hours to Melbourne is Torquay. Here properties are up 14% to $690,000 and White said it was because the coastal location is appealing to buyers. Torquay also has easy access to the freeway and Geelong bypass.

4. Baranduda

Danielle Cahill writing for Realestate.com.au says investors wanting to buy a home at a low price and get a good rent should consider Baranduda - 3 ½ hours drive north of Melbourne. Living on a rural retreat and having a community lifestyle is incredibly appealing to many baby boomers so you can get good returns. The town of Wodonga is also only 10 minutes drive away.

The median house price in Baranduda is $329,000 and the region had seen an increase in active listings of 315% in the past year.

A few things you should know about investing in property

Property investment is not a get rich quick scheme. You need to plan, prepare and do your homework if you want to be successful. We’ve given you some information about hot spots in regional Victoria, but visiting the area and chatting to a local agent or two is important to gain local knowledge and find out about the demographics.

Know your budget, what you can and can’t afford. Many newbie investors are unaware of the hidden costs of buying and selling an investment property - with inspection fees, legal fees and stamp duty when you buy, and capital gains tax waiting for you when you sell - it pays to know your stuff before you rush into buying your investment property!

We’ve only just covered the tip of the iceberg with property investment in this article. If you want more insights and personal finance tips about property investment, download our complimentary finance guide and we’ll deliver it straight to your inbox!