Past Future performance and Market value

Wiwin,

Median price and average market value is not the same. Be careful not to get confused there.
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Cheers!

Is your focus on the suburb its price point, or does that particular market offer additional opportunity?

Market conditions change, its part of the game. If your strategy is dependent on growth alone, then the time it takes to grow is your biggest risk. If you can do something to the property physically to hasten this process then you have some control on this risk. If you are waiting for the market to do all the work, then you are exposing yourself to the ‘time in the market’ risk most ‘buy/ hold and wait’ investors experience.

Rather than concern yourself with picking the perfect suburb, perhaps focus on your criteria, to ensure the property product is likely to achieve the outcome you desire. If you know what you want from property, you have a better chance of picking a product that is likely to contribute to this outcome. Remember it will take more than one property to retire you (if this is your outcome), so this next investment needs to offer a path to more investment.

Consider how its going to achieve this result, whether you can keep it or have to sell to continue accumulating, and what time you will sacrifice making it so.

As you become more experienced, you will compare only the time it takes to achieve an outcome, not whether or not it will happen. Given enough time, just about any investment will offer some return…

• This reply was modified 9 years, 11 months ago by  Richard.

Cheap stock in the sticks for neutral gearing at purchase is not my preferred approach. Perhaps others on this site are better suited to address this for you?

If it were me, I’d apply your research to an ‘inner city’ as you can get for your money land based site, with a dual income option or value add yield option to bridge the cash flow gap. I’d prioritise the location and land size over the dwelling standard, obviously ensuring the product can still be rented @ market. Employ the value add to try and manufacture equity, ensuring the ‘improvements’ at least value up – you can forecast this. Best case create equity, worst case increase my market share to attract higher returns, funded from yield. In either case, a potential path to hasten the capacity for further investment.

Last tips, I don’t chase premiums in the market. Reno only to the majority product standard, ensuring majority demand and I use design to plan these next steps, so I can borrow to afford them, rather than funding from cash or equity.

CBD doesn’t mean millions from my experience, there is plenty of market for all budgets. I was referring to a CBD like Brisbane, which you can afford for $400K, within 10-12kms of the CBD.

A recent regional example was on the sunshine coast where you can buy duplex sites with an existing dwelling on them for less than $400K, I had a client secure one very recently. I think its still in its settlement period actually. The suburb offers leading growth for the area, rather than generic ripple and with design and reno it can be split into 2 dwellings.

As mentioned in my previous post, using design to borrow to future value, allows the product to potentially create equity, but definitely add market share and extra income which contributes to your serviceability and hasten your portfolio development.. I’m sure the brokers on this forum have achieved this many times on behalf of clients.

There are lots of strategies, sometimes it pays to afford some expertise to help you understand your potential and give the direction and clarity you need to commit and participate.