Hi The Newbie Investor, I am pleased you got something out of it.

.

Off-the-Plan or Pre-Built? New or Old?

Do the research and let the numbers tell the story, and then you decide. If we could find finished stock in the areas that rank at the top of our list we would be buying them all asap. Finding stock is always our number one problem and there are no short cuts when you use the research method. 

Hi Warren, 

I think you are severely compromising your strategy based on lifestyle considerations. You could pickup a solid investment property with far lower overheads, positive cash flow and great capital growth potential, then just rent a short stay property exactly where you want to be each time your are here.

This would provide you with a far better NET return in the long term. 

It's all in the due diligence. With a market place full of rubbish your job is find the winners. There are around 250,000 properties listed for sale today, of those 1000 would make a great portfolio investment.

We research the market looking for the 1 in 250 property using the rating system we have developed. The system rates each suburb using each of the 40 sets of market data we collect. Most of the data we buy, some we collect off the web using various automated methods.
From here we score a potential suburb out of a total of 1000 point, 500 points for Statistical indicators and 500 points for Fundamental indicators. Each category is weighted according to it's importance in the demand v supply balance.

We then break these 40 down in four groups:

• Current Demand Drivers
• Future Demand Drivers
• Supply Drivers
• Amenity Drivers

A shortened list of a few of the data sets collected as follows:

Statistical Indicators

1. Number of Days a house/unit in the suburb is on the market –  The lower the better, this shows a higher demand for that type of dwelling in the area. If the number of days have been decreasing over the past six months this is even better
.
2. % of vendor discounting – The lower this number the better as it shows that buyers have less choice and less ability to negotiate. It also indicates a suburb could be in high demand
.
3. Auction Clearance Rate – The higher the better. Higher numbers indicate a higher demand
.
4. Rental Yield – The higher the better as it indicates a higher demand in the area from renters who are prepared to pay more to live there.
5. % of Stock on Market – The lower this number is the more demand a suburb has and the higher the chance of getting a premium for the property is.
6. Online Search Interest – Takes the total number of online searches in an area and divides this by the number of properties available for sale in an area. The higher this number, the more potential demand the suburb has and the lower the supply in the market is to for fil the demand
7. Rental Vacancy Rate – The lower this % the better it is for investors and the more demand a suburb has
.
8. Proportion of Renters to Owners – The lower this number the better a suburb’s perception is. Owners have a tendency to look after their properties a little better than renters and therefore lift the perception of an area’s quality.

If these metrics combined give us a rating that indicates the demand is exceeding supply (market is imbalanced), then we move onto the fundamental searches to validate the statistical data.

Fundamental Indicators

1. Proximity to water/ocean.
2. Views of hills/mountains/district/CBD etc
.
3. Transport Infrastructure – Recently announced, in progress or to be shortly started that will reduce commute times to the CBD and increase demand for a suburb.
4. The ripple effect of close suburb neighbors – If suburbs within close proximity have grown substantially recently, the chances are that the subject suburb will grow quickly in order to maintain a pricing balance between the growth suburb and the subject suburb
.
5. Project Booms – Are there any large projects nearby that will create a spike in demand (eg. train lines, water supplies, shipping ports, processing plants)
.
6. Ugly Ducklings – Has the suburb been branded rough or ugly in the past and the only problem with the suburb is its reputation? Are private buyers updating their properties in the area? Are developers buying up new land and building new apartments? Are businesses and trendy cafes entering the area now?
7. Urban Renewal / Government Works – Has the government put forward a proposal to improve the appeal of an area (eg. parks, malls, entertainment, shopping precincts).
8. Lifestyle Features – Are there any current or planned lifestyle amenities nearby like golf courses, large entertainment precincts, tourist attractions?

If those two searches reveal that the suburb is a potential hot spot, then we drill down to find the best streets within the suburb and find developments within close proximity to those to give the best chance of fast capital gains.

The data houses like Residex, RP Data and SQM Research provide data that fluctuates greatly but is best used as a potential source to gather suburb shortlists for investigation from. The issue with these data providers is that they don't provide past recommendation data, making it hard to gauge their actual performance.

Stopping the trend of a suburb is of particular value when deciding whether a suburb is worth fundamentally investigating. For example, it is no good going off to investigate a suburb that has been growing at 15%p.a. for the past 5 years. Like everything in life, when one area gets too expensive, people will compromise on the next best cheaper alternative until the prices of surrounding less desirable suburbs catch up.

There is so much more that could be written on the topic, but these items will give you a basic template of what you can use to instigate your research model for superior returns of investment properties. 

Your personal circumstances are key here. What percentage of your NET worth is your Super?

How many years to retirement?

How much exposure to property do you have outside the SMSF?

If none, why inside SMSF and not outside?

What likely mix are you looking at within SMSF, Shares, Bonds, CFD's, FX, etc..

How much cash you hold outside Super?

You need real FP advice before diving in.

Familiarity Breeds Contempt is the old saying: Learning to always respect the client and not get sucked into worshiping the dollar is a lesson that takes an incident like this to learn.

We have all made the mistake of taking someone for granted, in this case it was their clients and publicly, it has worked out to be expensive for Nathan & B invested, nobody likes loosing a client though bad service. I am sure that at heart, B invested are trying to do the right thing, sometimes when you take you eye off the ball and the dollar signs are flying around you can get arrogant, I am very pleased to hear Nathan called you, it shows Nathan is willing to face up and repair the relationship.

I am sure there were a few changes at B invested after this happened. 

When you buy an Investment Property, your ability to keep saving for your next property is not reduced, however when you buy a PPoR your costs go up and your savings go down for a quite a few years.

To grow a portfolio you need to continue with your savings while your investment property's equity is growing. If you have bought well, your investment property equity will be growing a lot faster then you can possibly save. Once your portfolio gets to 4 or 5 properties, you can then turn your attention to buying a home for yourself.

My mother, who was a great property investor told me " it took me 10 years to make my 1st million dollars, but only 3 years to make the 2nd million". She bought her first investment property age 50yo and went on to buy 20 more over the next 15 years.

– See more at: https://www.propertyinvesting.com/forums/help-needed/4348869#comment-297545

My suggestion would be to look at focusing on one strategy for growing your portfolio and become an expert at managing that. 

I like a simple balanced strategy, by getting the benefits from a combination of a strong rental market, property growth and tax credits.

Look at sourcing property in areas that tick the following boxes: 

• High rental demand areas. In the early to mid phase of the life of a portfolio I just use yield to maintain the debt (focusing on high yield areas that turn out to have low long term growth can be a wealth building disaster)
• Areas that have major growth drivers to create long term capital growth to build equity and wealth
• New assets to access maximum tax credits to maximise your after tax income (and to keep your accountant happy)

Even with 100% debt, you can find all three of the above giving you positive cash flow in the current market and a $20<>p.w. negatively cash flow if you are fixing the rate for 3-5 years. These areas have the ability out preform the national and state averages, putting you at the head of the pack.  

Carpet Beetles wont eat Solution Dyed Nylon.

With over 140 properties under our belts Dave & I have found through trial and error the best carpet is "Solution Dyed Nylon". It stays cleaner, It stands up straighter for years longer then Poly-prop and other fibers. Wool is the best for your own home, but only if you look after it, but Solution Dyed Nylon is the by far the best for rentals. Polypropylene is rubbish and looks terrible within two years or three months after it's first steam clean. Poly Prop is manufactured with an oil in the fiber that is removed when cleaned and from then on Poly  Prop holds dirt, as well as crushes down quickly. Add to that Poly Prop always looks cheap.

A good foam underlay in important too. You wont need to change a foam underlay for 15 years and a Solution Dyed Nylon Twist Pile carpet will steam clean better then anything else and look like new every time. Rubber underlays flatten, fall apart and can cause your carpet to age much quicker.

Most, if not all stains will come out of Solution Dyed Nylon Twist pile with a steam clean. I have carefully trimmed burn marks out of Solution Dyed Nylon Twist Pile carpet with a pair of scissors and left the carpet in for another 5 years.

Don't install Loop Piles, Pattens or light colours. I have found loop piles damage far more easily and it's hard repair pulled loops and runs, aim for a Twist Pile and darker then a coffee stain is a good idea too. I make the carpet the darkest colour in the room with the walls a colour lighter and the ceilings always white.

Tenants LOVE carpet in bedrooms and it makes the house feel more live-able for them. After all they are your customer when you are a property investor.

As a price guide: You need to be paying around $140-180 per broadloom meter (3600mm wide). At those prices the cost of Solution Dyed Nylon is working out to ONLY $39 -$50 per square meter, quality carpet is still your cheapest floor covering. 

It might be time to think about sorting out your portfolio's financing. In your position you should have all your properties setup so you are able to access maximum equity with a minimum of admin and time delay.

I would also advise you to consider working on a strategic portfolio plan as part of your over all wealth strategy. A good property investment advisor should be able to help you do all of this. 

Xdrew,  Great analysis of the area fundaments. Reading your review, an investor can see how off the mark Cairns is as an investment hot spot. However, I was in on a conversation with some developers, they were talking about a Chinese owned casino development proposal with a rail link to the Cairns Airport. The land has been bought for the casino and the rail corridor. This is one to watch, but don't move on it until they start turning the soil, as these things can take up to 10-15 years to get off the ground.