Viewing by month: November 2014

6 tips to find an undervalued suburb

All it takes to find the next area that's set to boom is a bit of elbow grease and these six essential tips:

 

1. BE OPEN TO SEARCHING INTERSTATE

Chances are that the most appropriate suburb to invest for finding growth potential is not within a 10km radius of your home. In fact, looking outside your local area and buying sight unseen can actually be an advantage, because it forces you to look more at the growth drivers and statistics as opposed to trivial and emotional things, like whether or not you like the look of a bathroom. If you are still nervous about venturing into the unknown, the services of a buyer's agent might be your best bet.

 

2. LOOK FOR THE VISIBLE WARNING SIGNS

Look closely and you might realise that a working-class suburb is starting to show signs of accommodating for a wealthier demographic. Some of the tell-tale signs that gentrification is underway and property prices should adjust in a positive manner accordingly include:

- New cafes are starting up in the high street

- Low density development activity - such as developers purchasing house blocks and building 2-3 townhouses on a site

- Renovation projects underway on old houses

- Introduction of 'disposable income' shops

- 'Phasing out' of lower-rent service provider shops  (such as local accounting firms, dry cleaners, etc.) to make way for galleries, boutiques, cafes and bars

- Increased numbers of prep children in an annual intake.

 

3. STUDY SUPPLY AND DEMAND

It's very important to look for a low vacancy rate so you are more likely to find a tenant for the property. In addition to studying your Investment Property, also speaking to multiple local real estate agents for up-to-the-minute vacancy rates is a wise move. Other stats which indicate supply and demand include the typical number of days a property is on the market for before it is sold, the amount stock on market, the auction clearance rates, the renter-to-home-owner ratio and the internet search scores.

 

4. RESEARCH FUTURE INFRASTRUCTURE GROWTH

New or improved roads, rail or bus links are all examples of transport infrastructure which can add tremendous value to a suburb. Moreover, if a government is planning this kind of development it is a good sign that they are anticipating a strong population increase in the area, which is a giveaway that property prices will rise too.

It is also an indication that medical and education facilities, shopping precincts and employment hubs will also have to grow accordingly.

All of the proposed future spends are available online, through the appropriate council websites. It's also a good idea to keep a watch out for planning alerts, local community news, streetscape changes and new development starts.

And aside from upgrades and additions, it's important to consider intangible drivers which add value, such as scenic views of water, trees or a city.

 

5. CONSIDER THE DEMOGRAPHIC

If the population's median age is decreasing, while the population itself and the average household income is increasing, this is a solid indication that growth is on the way. For the most recent reliable stats, check out www.abs.gov.au.

Another giveaway that the numbers of young professionals are on the up is if the local bars, cafes and restaurants are becoming more upmarket.

 

6. MONITOR MEDIAN PRICES AND GROWTH RATES

This is where the ripple effect comes in. The best way to go about finding one is to first identify expensive suburbs that have recently experienced a surge in growth in the last 12 months. This is often happening within 10km from the CBD or towards the coastline and could be occurring due new transport infrastructure or perhaps the emergence of a new caf culture.

The next step is to find the cheaper immediate neighbours which have not had their growth spurt yet. Also monitor the next group of neighbours because the ripple can often go further than the adjoining suburbs.

Then compare the growth and price of the premium suburb with its neighbours. Put simply, the greater the difference, the greater the potential. Generally a good rule is that if there's more than a 10% difference in prices than the cheaper suburb should have some ground to gain.

Just keep in mind that the neighbours with the most similarities to the source of growth are the ones most likely to get a higher share of the ripple. Also, check that whatever it is that's fuelling the price rise would also suit the demographic of the cheaper suburb.

Therefore, identifying the chief growth driver(s) is crucial to your success in riding the ripple effect.

 


0 comments | Posted by Reality Bytes - Real Estate Training Blog on 26/11/2014 at 4:06 PM | Categories:

How to buy the right beach house

There's one Australian tradition guaranteed to stand the test of time - the annual summer pilgrimage where Mum, Dad, the dog and 2.3 kids pile into the car and head for their favourite coastal spot.

After a week relaxing on your favourite beach, the idea of buying your own little piece of seaside paradise can prove very tempting.

You tell yourself it may prove to be a good investment too - and it can be, if you stick to the beach house buying guidelines!

 

FIND THE RIGHT LOCATION

 

The best performing beachside locations are within 2.5 hours drive of a major metropolitan area, particularly those with access to a major highway.

Look for small seaside towns in a region with a multi-faceted local economy, which provides a strong local rental market all year round.

Don't be tempted by areas with a lot of high rise development and fly in visitors. These locations can have large numbers of new units added to a small market in a short period of time which makes these properties vulnerable during a downturn.

 

PICK THE RIGHT BEACH

 

The right location needs the right beach to ensure it is a popular destination for all sorts of visitors.

Long swept beaches with clean breaking surf are always popular, but even better is a location which also has a protected swimming area for smaller children.

Prime beachside areas play host to a number of different past times, like surfing, sailing, scuba diving and boating, which attract high income visitors at different times of the year.

Don't forget night-time either - seaside towns with a smattering of good restaurants and at least one decent late night watering hole are favoured by families with grown up children and holidaying groups of young adults.

The further south you travel, the more important it is to ensure your beach spot is close to winter activities like craft markets, wineries and national parks.

 

PICK THE RIGHT PROPERTY

 

The best results for properties in seaside towns tend to be from houses, not apartments, especially properties about the same size as a standard suburban house.

Tiny beach huts and sprawling mansions often perform quite badly during cyclical downturns.

Start your search around the middle of the local price range and zero in on a 3 bedroom houses around ten minutes walk away from the township.

The best properties will be in a relatively quiet bush setting and have a generous balcony or outdoor entertaining area and plenty of storage for boats and water sports equipment in a lock up garage.

And of course it should be close to a favoured beach - no more than 20 minutes walk.

Once you've found a likely candidate, I'd recommend searching through back copies of the local newspaper, paying particular attention to past events like flooding or bush fires.

 

HAVE THE RIGHT TIME FRAME IN MIND

 

Properties in coastal resort towns usually have greater price volatility and lower capital growth than those in capital city markets.

If you invest your hard earned money into a seaside property, you may have to be quite patient to see good results, as anyone trying to sell a beach house during the GFC can testify.

But a smart buy in the right location can pay good long term dividends to the shrewd purchaser.

 


0 comments | Posted by Reality Bytes - Real Estate Training Blog on 19/11/2014 at 12:45 PM | Categories:

9 steps to getting started in property investment

Admit it, you've been thinking about investing in property.

You've read the books, magazines and reports. You've been religiously checking real estate websites for properties.

Yet when push comes to shove, you get stopped.

You're not alone. In fact less than 6% of Australians or roughly 1.3 million own an investment property, even though property is a national past-time for us.

This is not surprising. A lot of people get overwhelmed by the process and quit before they even begin.

Reality is, property investing is pretty simple. There are no complicated steps you need to do and the concept is also easy to understand.

So here are nine steps to starting a property portfolio on a solid ground, without losing your mind.

 

1. CHECK YOUR FINANCES

This can be as simple as listing all your assets, including incomes and work out your expenses.

This will give you an idea how much cash you have available to invest. Don't immediately assume that you can't afford to invest. As long as you have a stable and reasonably good paying job with solid employment history, you won't have a problem getting a loan.

 

2. GET A PRE-APPROVAL

You can get pre-approval through your lender directly or through your trusted mortgage broker. Going through a broker before applying for a pre-approval can be beneficial if you're not sure you're financially ready to invest.

Applying for multiple pre-approvals is not a good idea. Each time you apply, the lender will check your credit record. If there are multiple inquiries, this sends a red flag to the lender and may refuse your application.

Top tips:

- Find out if you qualify for a loan

- Check your credit rating

- Consider reducing your debt or credit card limit

 

3. SET YOUR GOALS

What are you looking to achieve? What does success look like to you? Property investors generally invest in property to secure their financial future or to be free to do what they want, when they want it.

In order for you to achieve your goals, you must first articulate what your goals are. More importantly, you need to set a deadline as to when you want to achieve these. Then you can work backwards.

For example, if you're looking to replace your income and retire on your investments within 10 years, you can start by creating a 10-year plan, broken down further to 5-yearly, yearly, bi-annual all the way down to weekly timeline. This way you don't get overwhelmed by the enormity of the task.

 

4. UNDERSTAND YOUR ATTITUDE TO RISK

Your risk profile will dictate your strategy. What sort of risk can you tolerate?

Getting an understanding of your own attitude to risk will help you create a strategy that reflects this.

 

5. START BUDGETING

It's not sexy. It's not even remotely interesting. But budgeting is the only way to ensure you're able to balance your income and expenses. It allows you to see where you've been spending your money and helps you to plan for bigger expenses down the line.

There's good budgeting software available, such as this budget planner and this spreadsheet tool.

Make sure to set this up even before you start looking for a property.

 

6. CREATE A PURCHASE PLAN

How does an ideal purchase plan look like? It's simple. It should facilitate your goals of growing your portfolio to a point where it's producing the growth or income you're aiming for. It should serve as a structure for you to stay in the game.

Here is an example of a purchase plan you can follow:

- Define your strategy

- Set up your criteria

- Do your research

- Cull your list

- Get appraisal

- Do your due diligence

- Make and offer and negotiate

 

7. BE INFORMED

Use the tools available to you to make an informed decision. Knowing the market can be key to making the right investment choice.

Visit realestate.com.au/invest from some valuable insights.

 

8. STAY FOCUSED

Make sure you stay focused. Investing in property is a business choice, not an emotional one.

- Get clear about what you want to achieve

- Set a date as to when you want to achieve this goal

- Identify milestones you need to do to get to your goals

 

9. DON'T GIVE UP

It's easy to get overwhelmed when you're starting something new and as massive as property investing.

But don't give up. Just imagine in 10 years, if you buy the right properties this year, you could be sitting back, feeling happy, secure and even proud that you bought properties that more than doubled their values while your peers and everyone else wishes they'd bought back in the day.

How good would that feel?

 


0 comments | Posted by Reality Bytes - Real Estate Training Blog on 12/11/2014 at 9:27 AM | Categories:

Top tips for negotiating a sale

Haggling over prices and knowing what to pay can be daunting for start-out property investors, but armed with the right information you can negotiate yourself a great price.

 

#1. Sticking to a budget

One of the most important aspects of negotiating is knowing what you have to spend. By having strict rules as to what you can afford it will stop you overspending and blowing out your investments plans, especially if you are looking for positively geared properties. If you overspend, either by getting caught up in the drama of auction day, or being intent on competing with another buying, you may get the property, but find out you cannot afford the payments.

 

#2. Knowing the value of a property

Researching the market value of an area is vitally important and should be done, in depth, before making an offer. Your research should include the property's sale history - which can be found online, how much comparable properties are selling for in the area and a history of recent sales in the area.

 

#3. Know the property inside out

By having a solid knowledge of the property you are in a better position to negotiate. While you don't want too many faults, knowing what problems do exist will help you negotiate a better deal.

Knowing the history of a property will also help. The best way to do this is by asking a lot of questions. Has it been passed in at auction, what was its valuation when the vendors bought it, how many offers have been made, how many people have inspected it, has the price been reduced and so on.

 

#4. Do due diligence

Have all the relevant inspections completed, especially building and pest. This way you know you are negotiating for a solid dwelling that is unlikely to fall apart around your ears in years to come.

 

#5. Don't be in a rush - and don't get emotional

Doing anything in a rush is bad idea. No matter how great a deal seems, don't rush in without doing due diligence. Always ask yourself, could there be a reason the deal seems so good?

 

It is also important not to get emotionally attached to a property. You can love it after you buy it, but getting attached pre-sale can mean overspending and rushing in. Remember that investing should be done by numbers, not by heart.


0 comments | Posted by Reality Bytes - Real Estate Training Blog on 03/11/2014 at 12:04 PM | Categories: