hi all,
I'm a long time lurker first time post, I would like some help in the area of suburb due diligence as I'm just starting out and wanting to do renos to start.
what areas should I focus on when doing my research, do I look at the price of rundown places compared to already completed projects to get an idea of profit margins, also should I be talking to agents to find the best areas to buy?
I’m a little confused with were to start any help would be greatYou'll probably want to narrow down your suburb list a bit before you go to an agent. For example, you might say "South Eastern suburbs of Melbourne" rather than "a property somewhere in Australia".
If you are wanting to do some renovations, you probably need to consider properties that are either in reasonable regular commuting distance of where you live, or you will need to be prepared to take some time off work to go to the property to renovate it, or outsource to a builder.
Taking a look at the rear pages of the Australian Property Investor magazine you'll find lots of stats. In particular, you will be interested in capital growth, vacancy rates, and rental yields. You will probably want something that has, over the last decade, performed well. But at the same time, you would hopefully acquire a property just before its suburb booms. You can do this by figuring out which suburbs had very high capital growth during the last 1-3 years, then get out a map and see what the ugly sister suburbs next door are that have yet to become beautiful swans.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
One of the easiest ways to get started is in your own suburb.
When you first start looking at property it's hard to pick an area where you can make money and it is often easier to pick a suburb then keep working your way out from that suburb until you get to one that works.
For instance you can start in your suburb and look at renovated and unrenovated properties. How much do renovated properties sell for, how much for unreno'd ones. Are there parts of town you wouldn't buy into why? Is there a premium for properties close to infrastructure is there reasons they are more expensive? Start talking to agents, ask them questions. Do not be afraid of looking like an idiot, it doesn't matter.
So you look at properties in your own suburb fixer uppers sell for $150k and renovated ones sell for $160k. It's pretty obvious you can't make any money by the time you spend money on materials. If the properties sell for $150 unreno'd and then for $220k done up then there may be an opportunity.
Due diligence is just about asking questions and trying to have as much information as you can. Then it is about either using that information to buy a property or about using that information to move on from an area that won't make money.
Don't be afraid to start from scratch around your area, even if the numbers NEVER work near you, you can still practice and learn how to talk to people or what information is important and what is waffle.
Hope this sorta helped, it really is a matter of starting somewhere. I've started in one place and then ended up in a completely different suburb where the numbers did work.
(Above numbers for illustration purposes only)
Good luck
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeTreat the whole thing as a market. You know what price you'll go out and buy fish and chips at, and what price a 2 litre bottle of milk should be. Its no more complex than that.
There is a price, a product .. and a demand.
The real estate agent will know the price .. and SHOULD know the products in demand. The property manager will know the demand … and the price .. for rental proprty (rental should always be kept separate from buying .. one is tenancies .. the other is owners .. two totally different market schemes). Both markets are necessary to observe to get an idea of how things are happening.
If you are lucky .. you can pickup in an area that has already moved. So .. some of the prices do not reflect the change in the market, because the last people to be educated about a move in the market .. are usually .. the vendors themselves.
The product means assessing whether the current usage for the property or concern is valid or .. flexible. Often I have gone in with a property that is under one criteria (a 2br with big backyard and large laundry area) and converted it into a totally different product (a 3br with euro laundry and patio). It means I now cater for a totally different type of client. But .. for that to be useful .. the type of client i'm looking for changing the property to .. must actually exist.
Which of course .. leads to demand. There are usually fixed criteria for who a likely client will be. Is your area filled with FHB clients or is it leaning towards more established suitors for the property? What can you change with this property to make it more towards your clientelle. Is the area of your market still in demand .. OR IS IT SATURATED? Make sure you know this .. its no fun waiting for that situation to correct itself.
You can head into the markets blindsight .. hope to hit it lucky .. and pray that you dont lose out .. or you can do your homework .. know whats happening in your area .. and serve up the right product for the market to embrace. Its your choice. This is why its usually best to concentrate on a couple of suburbs .. know them backwards .. so when the opportunities arise .. you know they are out there. Too many burbs and you end up being an expert on none of them.
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