Hello,
What I would like to know from any experienced investors out there is: Are they still investing in their “own backyard”; that is: in the same city to which you live in it. For example: if you live in bayside or inner city Melbourne, are you still investing in & around Melbourne looking for undervalued properties, etc. OR are you looking at your “own backyard” & thinking “the market here is too high & peaking – I’m going to wait a few years until it “drops off the boil” & then start buyng again when prices have dropped 15-30%???
I would prefer if an experienced investor didn’t say “Yes, I am still buying undervalued properties, but in another state, etc”’
The Reno Kings from Brisbane I believe are still buying undervalued properties in Brisbane even though prices for properties there are quite high (I think – prove me wrong otherwise).
I guess what I want to find out is:
1) Do I buy up BIG when I think the market is down, & then not buy anything for the next 7-10 years when the market falls again??? OR
2) Do I continue to buy undervalued properties (20% or more – under the market) on say a yearly basis no matter what the market is doing, because I’m still getting a “good buy”.
My investment strategy is “Buy & Hold for the Long Term” buying only in high capital growth/blue-chip suburbs. I live in Cairns, Far North QLD & I think the market here is still pushing along quite strongly & will continue to do it for the next 3-4 years. I’ve just bought my 1st investment property at around 20% under market in a blue-chip suburb.
Any thoughts would be much appreciated.
Col
HI there Col
Firstly there is no right and wrong answer to this question – it is a personal preference.
In our situation – we tended to invest in our own backyard. But as my husband was in the Airforce, our backyard changed every couple of years. We would initially rent or live in a married quarter, become familiar with the town and then invest if we thought appropriate – or could from a financial point of view.
The properties we had that were not in our own backyard were situated near family members – so that when we travelled to visit family – we could claim some of our costs if we also did an inspection of the property and undertook some maintenance at the time. It also meant they could keep an eye on the property for us if there was a problem.
One issue about having all your properties in the one area is – what happens if there is a natural disaster? In Cairns it might be a cyclone. In our case – we lost 2 properties in the Canberra bushfire because they were in the same suburb – which set us back a couple of years.
As you grow older – the travel and maintenance may also be an issue. I do think you have to be prepared to go visit your properties for inspections to ensure the property managers are doing their job – so that may also impact on where you choose to invest.
Anyway – property is very forgiving – provided you get the fundamentals right!
thanksHi Col,
I wouldnt say I'm an experienced investor.But after a foray in the US and Queensland I'm looking to buy properties in my home town of Bendigo.
Regards MartinHey
I wouldnt call myself experienced certainly not a pro. Maybe more of a part-time investor.
Initially I have purchased properties with strong rent returns in my home city, however now I am moving onto properties that are not in my locality, maybe 2 hours or so away or even sight-unseen.
I believe that as long as due diligence is conducted, you create a system that works and surround yourself with the appropriate professionals there is no problem with this.My strategy has previously been Buy & Hold(pretty much at market value) but now I want to refine into buying undervalued property/fixing up and Holding.
best of luck
Regards
Mick
Get a building and pest reports on all properties, get full internal pics from the agent showing anywork needing to be done, get the agent to arrange a couple of quotes and bingo, no need to visit the place anywhere in australia. Now if you are a nervous investor that needs to touch and feel a place then by all means make the trip, but if you get good property managers who take pics on two of their 4 inspections during the year as standard, forward these on to you with comments, have qutes already done on anything they suggest needs doing, then why visit??
Its all a business and the less tactile touchy feely you get about the place the better and more professional will be your treating of the property as an asset and not the tenants house.
It may seem a little cold but we do give tenants that look after the place movie tickets or gardening vouchers depending on the property each year. This reinforces their pride in looking after the place and is a good way to reduce default notices as we found, with only one out of 18 tenants needing a notice rather than 5 the previous year.
Be creative, buy where you have done your research, but most of all, do something!!!!
Good Luck and Happy Hunting
DD
Thanks everyone for their comments so far – I like the ideas about giving good tenants movie tickets or gardening vouchers.
Col
Research, google, googleearth, maps make buying unseen a lot easier. Speak to plenty of real estate agents and property managers and ask them heaps of questions – some may be honest, some aren't. The more research you do the better decision you'll make. Linda
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