Wondering what selection criteria everyone uses when looking for an area to invest in.
It really depends… If I’m looking for Cap Gain – a fast growing area (property tends to trend long term, so a fast growing area this yr, will probably still be a fast growing are next yr., of course you have to beaware of booms, etc), where as with CF+ I’m looking at an area that has at leat two independant industries (so farming and fishing for example), and one that has a good level of ammenities and one that still shows growth of pop.
Rgds.
Lucifer_auI invest near where I live.
I want to be able to drive by and keep an eye on things.
I know my area well. Its in surburban Melbourne, near beach on a station line, and in a growing area and the land is being reused. ie. older joints are being pulled down and new ones built.
I dont see a need to look at other areas. I am more than happy to invest locally. I also invest for capital gains.
I look firstly for affordability. It’s no good looking within 5km of Sydney CBD if my deposit and my income won’t support it.
So, when I’ve found a few areas where I can afford to buy, then I start to research the possible gross yields of a few areas. I want to make money, not lose it for 10yrs before I see a return.
Once I’ve narrowed the field a bit, I then really start to research the areas indepth. Things I like are population growth, very few crime reports and employment opportunities.
After this I may ring a few real estate agents and have a talk to their rental property managers. I ask such questions as vacancy rates, how long it takes to fill a vacancy, how good are their current tenants and what do they prefer when looking for a rental, what the median rents are in the area.
All being well, I will then start actually looking for houses to purchase. I may enter into a contract or two, subject to the usual ‘out’ clauses. If the pest report comes back, chokka full of termites, I prefer to back off. If the building report comes back very reactive soil and movement in house is obvious, I’m out. If the council searches find you need a snorkel every time it floods, then I’m out.
All being well, I may purchase one house in an area and let it perform for a year or so and see how it, and my PM goes. If its no good and nothing but a big hassle, I sell. If it’s going well then I look to buying as many as I can get my hands on. Hopefully before everyone else does.[biggrin]
If you want to get out of a hole, first stop digging.
Appreciated reading your reply Brenda.
thanks, DianeMy family and friends are in real estate and have told me to look at your local area. write down as many positives and negatives about it, how many new houses you see, new land opportunities, how many knock down rebuilds etc. Is your area starting to grow, grown, over the hill…? Check out your local council. what developments are on the cards that could produce a property price rise. Although I have also been told by my agent friends, “never trust a real estate agent”.
Hello everyone
I,m new to this so please bear with me .
As far as investing im happy to invest in +cashflow realestate all over the country you are only bound by your imagination.My qustion to any one that can point me in the right direction is i,m in the USA now and found really cool deals that would work but i can,t get concreat advise on tax and obtaining finance, anyone with any idears?
ThanksHi Lumwood
Our strategy is to buy within 45 minutes of a major centre in a town that hasnt been touched with the growth wand.
This does involve many hours doing RESEARCH but it does pay off – in some instances very well.
We relocated to regional NSW about 9 months ago and found a place to live 45 mins out of town. Upon a bit of research and talk with the locals etc, we have sealed 3 deals within this town.
The major town centre has been a big growth town and the place where we live has very limited rentals, so finding tenants is no problem, especially when you compare it to the prices in town(basically similar to Sydney prices). Plus travelling 45 mins for country people is considered pretty normal – some travel for 1.5hrs to get to town to work. When you think about it, most city people travel this as well – the problem is that they just don’t move much due to being stuck in traffic!
The first house we bought was tenanted before we finished the renovations. The tenants were keen to move in so we arrange to finish the inside of the house for them to move in and are currently now re-painting the outside for them. As Steve would say, it was a win/win situation.
Our most recent one in the same town was a great deal and our best yet! On for $55K but got it for $27K due to some renos needed and the buyer was desperate to sell as he lived in Melb and didn’t want the hassle of having to worry about it(deceased house). Even after the renos ($5K-10K at the most) the house is still an excellent positive cashflow. We already had a prospective tenant advise that they want to move in – and get this, they were happy to do the renos on it for us if they could move in as soon as it’s finalised. Again we have arranged a win/win situation where they will pay the full rental each week with the real estate agent and we pay them back half of that amount to do the renos over six months(of course we pay for the materials but $60 a week for labour is pretty good and saves us having to do it this time – plus his brother is an electrician and his nephew a builder, what more could we hope for!). By arranging for the rent to be at full cost from the beginning, we avoided the problems of the tenant wondering what it will be once the renos are complete – he knows what he’ll be paying from the onset and we’re arranging a contract for the work to be done over the 6 months – so again another win/win situation.
So Lumwood, providing you’re prepared to do the research, there’s plenty out there for you to grab with a positive cashflow. Make sure you do the research though as you don’t want to purchase property in a dying town
HiI get most of my information from the internet and newspapers due to where I live.
Living in little country towns for the last 20 years I have learned that without a council that is progressive little towns stagnate. Pay close attention to a huge shift in change of coucillors at local election time. A country town will progress and new development applications that were previously denied (such as Harvey Norman, Big W, Franklins etc) will be approved when there is a major shift in local councils.
The main reason for this is that many local councillors protect their own financial interests (as they own most of the shops on the main street etc) and they want the money their daily activities bring them.
Secondly study the demographic of the area. If the area is mainly blue collar workers like tradesman (look for the utes and advertising on the cars in the driveways) your market will be different to that of doctors and lawyers etc. The Bureau of Statistics publish their information on the internet. You may have to pay for some reports but these will be specific and in depth.
Go for a Sunday drive around some areas if you have the time. Walk up and down the shopping isles. Pay attention to what is on the shelves and in the trolleys. Just what kind of cars are people driving, what kind of toys are people giving their kids and what is in their trolleys. All this makes up the psyche of the person you will deal with in this area. Whatever we do in this business is about the person, not the real estate.
One last piece of advice, go to Harvey Norman internet sites, RetraVision, Woolworths/Safeway, KMart, McDonalds etc. Where are their new stores going? They spend millions on making sure their newest franchises will last. If its good enough for them then it’s most probably going to be a winner for real estate.
Oh and don’t forget gossip. Long before it comes into being, someone who doesn’t want it to usually tells someone else who tells someone else and eventually the newspaper gets hold of it and whammo gossip has become a huge story in the local towns newspaper and that newspaper is own by another bigger company etc etc. Where there is smoke there’s fire. Its not too much hassles to keep your ear to the ground and listen. Plus the human animal is at least 9 times more motivated by emotion than fact.
I have heaps more that I do when making a decision on where is the next best thing, but these are just some of them. And remember most people don’t mind driving about half an hour to work so explore at least this wide from a major country centre.
One last phenomenon that I have just recently wittnesed and will most probably not happen until the next economic cycle – When housing prices in Sydney exploded many young families (and it could have been retirees) took the opportunity to move to country locations such as from Sydney to Tamworth or Sydney to Coffs Harbour and Port Macquarie. You know places about 6 hours from Sydney. They bought houses that cost about a third of their Sydney home, did renovations and now have 50% of what they sold their Sydney home for in the bank.
As a real estate investor, if you can pick when the money is going to move from Sydney and Melbourne and other capital centres to country locations and buy before this, there will be $100’s and $1000’s of dollars in capital gains to be made.
This is just some of thie information I have gathered. Anyway hope it helps.
Cheers
[gorgeous]
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