Welcome back. We're here again. Yep.Brisbane Property Pulse. Curtis, Trent. Yep. Here to talk all things Brisbaneand property. And property. Yep. Today, more of an evergreen subject, but just things that we s- that we see investors miss in, in their journey from start to finish of buying an investment property, and some places where they- Yeah, things that they overlook or- trip up on- yeah, along the way. yes, hopefully you guys don't make these mistakes. Yeah. Help you out. Yeah.
First up, people following trends without looking at the long term is something. Sokind of buying based on what's happening now rather than what's expected to happen, 'cause property's ultimately a longer-term investment, right?
If you're transacting in and out in a short timeframe, one to two years- very hard to make money that way. There's gotta be something more to your strategy where you're creating equity and value that way. So- Yep. The majority of people, that's what they're gonna be doing. Yeah, exactly. So yeah.
A, a few things around that, a few things to look out for, I suppose, when it comes to trying to, to plan out how a property or how an area is gonna perform over the next 10 years. Mate, what are some things we should be looking at? Just don't jump on the bandwagon with everybody else without doing some research.
So just because some people are buying in a certain area, that may not necessarily be a, be a good decision. Yeah. Yeah. Some things to look for, I suppose, again, I say it all the time, employment, infrastructure, amenity. But if you can find areas where there is an infrastructure project coming through, maybe it's a train line extension or upgrade- yeah, whether it's a new big retail commercial hub where you know, okay, there's gonna be a lot of employment going in there. Maybe it's a sh- a major shopping centre renovation- might be- or extension or-Road widening, things like that, where just your road travel time's gonna decrease. Some short-term pain with while the roadworks are going on.
Yeah. So sometimes if you're close to what would be deemed as a state road, have a look and see, you know, see what the--if there's any road widening works in the, in the process that's gonna make it easier to get in and out of the area. Yeah. I think a l- a lot of that sort of stuff happens in gentrifying areas as well, where there has been an influx of new people and first home buyers, for example, into a market where they'restarting to pour some money back into their properties through renovations andthe likes, which kind of prompts a lot of that to happen- yes,
too sometimes. Obviously, influxes into areas always prompt council and government spending as well. Yeah. But being able to identify those sort of areas where that work is either planned or underway, or where you can see the demographics in an area shifting. Yeah, typically is a good indicator of something that's gonna perform well over the medium to long term as well.
Number two, everyone assumes a cheap property is good value. I think the biggest takeaway with this is, like, you can find cheap properties comparatively within a suburb, in every suburb. Thematter is, is, is it gonna be cheap when you sell it or not? And can you make it- yeah, not a cheap property anymore?
Yeah, that's right. Why was it cheap- yeah, to start off with? Different level of investment, but cheap cars are they generally good? Yeah, typically not, or they're only getting worse. Typically not. You have to put more money- yeah- into it, and then it's whether your expense into that asset is gonna be repaid- yeah
down the track when you go to sell. Well,you-- can you control what's making it cheap? Is it cheap because it's in aflood-affected area? Yep. You can't change that. You can't control that. Is it cheap because it's on a main road? You can't change that. You can't control that. Yeah. Yeah. Is it cheap because it's in earshot of the train?
Yeah. You can't control that, right? If it's cheap because it's completely dilapidated but it's on a god street, okay, you can't get yourself out of that- yeah, but then it becomes a factor of- that's good value. Yeah. That's- That's a better value proposition as long as you're buying at price that's feasible to then do the work- do the work and make it
so it's not cheap. Yeah. Because again, if you're-- what's your exit strategy? If you're selling it without doing any work in that time, like, you're not getting it out of that situation, you're gonna be selling another cheap property. Yeah. So having a clear pathway, which we'lltouch on as another point, but having a good exit strategy becomes very important, around identifying good value on a cheap property.
Yeah. And that's what, you know, is the difference between cheap and value. You've got to find out, you know, this is cheap for a reason. Yeah. Is it a vehicle that's been written off? Yeah. You know, the, you know, like you said, flood v- flood-- previous flooding and things like that just- yeah, decrease the value that you're never gonna get back.
I see a good opportunity in, in a lot of strata too. Like, sometimes property in some strata buildings will, will gocheap because there's been a lot of issues. But if they've all been cleaned up, if they've all been budgeted for, for those issues to get cleaned up, and you can buy it cheap without necessarily needing to invest money back into the strata to rectify those issues, like, there are good opportunities there, right?
Like, you can- yeah- control why it's cheap in that situation. Yeah, definitely. You can certainly benefit there. Yeah. Just have to make sure, see what the, same as normal, see what's in the sinking fund. Yeah, exactly. You know, is it gonna require a, a capital input from all the owners, or is the money in the sinking fund? They've already got a working plan, to fix the issues that are there.
Yeah. But you get to buy it because no one else wants to touch it because they're not willing to take dig into it enough. Yeah, that's right. Or take on, the perceived risk. Yeah. Even thoughit's been planned and budgeted for.
What's next?
Okay.
Actual expenses after you've purchased the property, or to purchase the property. Stamp duty being one, mortgage repayments- what's the forecast? Most times, your financier is gonna look after the buffer in terms of the rate that you get assessed at.
But also, if you know that the property'sgonna need some work done to it, be very specific in your pricing of what'sgonna have to be done. Yeah. I think a lot of-- It's easy to budget the upfront cost, your stamp duty and things like that. Your broker should be going through that with you. We obviously forecast that stuff out with you.
Yeah. It's more about, yeah, the ongoing piece about, okay, what are my rates here? Yeah. What are my property management fees? What are the maintenance items that I'm gonna need to attend to, whether it's immediately or maybe in 6 to 12 months' time? Obviously leaning heavily on a building and pest report- yeah,
to help plan for those things beyond what'sobvious on inspection. Vacancy periods. Yeah. You know, when the property comes up for rent again, is there gonna be, you know, one week empty, two weeks empty, three weeks empty- yeah, four weeks empty? I'm sure every property manager will tell you, but there's a, the fine line between pushing too much on the rent versus the expense of the vacancy.
If you push just 'cause you-- in your head, you wanna know you're getting top dollar on the rent, and you push it just 20,$30 a week more, but all of a sudden you've got three weeks of vacancy as a result. Yeah. Say if you're taking- it's- an average rental is $700 a week andyou're trying to get 730. Yeah. Now, if you're- But you s-
missing out on 2,800 at, if it's empty for four weeks at $30 a week, it takes a while to catch that up. Yeah. You'rebehind that ball. That's nearly two years. So are you gonna have another vacancy in that period and go- yeah- through the same thing, and all of a suddenyou're $5,000 behind in what your expected rent was over, over two years 'causeyou're just trying to chase $20 more than what the market says you're gonna get.
Yeah, exactly. All- and that's where good professionals in your corner mean the world as well, like having a proper property manager, if it is an investment, that can talk you through those not researching supply is another big one, and it's something we talk a b- well, I know I talk about a lot with clients that we are onboarding and talking about when they might come in with a preconceived idea about what areas they've been researching. And a lot of the time there's a lot more media and releases around new development areas- yeah,
because they're trying to sell stock at the end of the day. Yeah. selling them as great investments, but at the end of the day, that's also where a lot of future supply is coming from, which is gonna hamstring capital growth. Yeah. And even if it's not in new areas that are getting established, just current areas as well-
that may be having rezoning happening thatyou're not aware of. Like one of the, our research tools that we use gives us recent applications. Whether they're approved, declined, or still pending, it puts it out in the property report, so it gives you an easy access into the council to have a look and see what that, DA actually involves.
So whether it's, you know, 'cause it'll say that turning one lot into three or one lot into nine or multi-units 55. Yeah. So it gives you a heading on what's happening there, so then you can, as I said, just dive straight into the council website and see what's actually in the development application or approval.
Yeah. It's a good point. I mean, the greenfield sites, it's pretty straightforward. If you know there's 1,000 lots to be developed over the next- Yep, 20 years- okay, maybe you're gonna be up against it. But for an established area, especially com- some of the inner city suburbs, if, if you can see that there's a DA on the property next door for 40units- Yeah, and you're buying a house and, you know- Right next to it.
Yeah. All of a sudden, maybe you've got overshadowing issues, and you've, you've gone from- just- a nice sunny backyard to one that's covered in shade. Traffic noise. Or living next to a construction zone for two, three years. Yeah. 'Cause if it's 40 units, that's, you know, your 18-month to two-year build period.
I've seen cases too where people have bought off the plan from interstate on a, on a unit complex, not really understanding the other developments around it. They've got all their expectations on what they've bought, city views- yeah, in the case I'm thinking about as well- and then it's gone completed, and then six months after completion they'd have developed next door and half the building just lost city views.
So they've bought at a price which demanded city views, and then they've spent the next seven years catching up- yeah, because all of a sudden they can't sell with city views. Yep. So they've got to really, really t- dive into what's happening in the area. Yeah, exactly. I think probably the most obvious place that people go wrong, particularly within investment purchases, not so much owner-occupied buyers, but buying with emotions rather than data and research and analysis of a market is a huge issue. And the opposite sometimes as well. Yeah. Not buying based on data and thinking, "Oh, I wouldn't live in that property."
Yeah. Well, if you're buying it for investment purposes only, you're not gonna live in it. Yeah. So why- the amount of people that go, "I don't like the, the layout of this or layout of that." And of course it's a consideration- But- but it shouldn't be a Itmight be a deal breaker for you and the home you wanna live in- yeah. B
but maybe it's not- 'Cause your livingcircumstances are different to the person beside you, and when it comes to yourtenant pool- Yeah you know, you've gotta think there's whole different lots ofother people. There's another 100,000 people living in that catchment that-Yeah it's gonna work for. That it's, it's gonna work for.
Yeah. So it works both, both ways. Yeah. I think a big thing with that is quality of finishes as well. Um- Yep, particularly for investment buyers, obviously they've done somewhat well for themselves. They're used to a certain quality of life, and they just can't picture themselves living- in what? in a house that has that kitchen or that bathroom- yeah,
because it's way too dated. But there's also, you're meeting the need of a tenant at their point in time as well, right? Um- in that area. In that area. Yeah. So it's not so much about what you're comfortable with, but it, does it appeal to the market? And it, it will, again, extremes aside- yeah, it typically will appeal to a segment of the market- Yep
that requires that service. Do theresearch. Yea. Do the research, rely on the data. Yeah. And I think a, a trap a lot of people fall into with that as well is buying just because you're comfortable with an area, particularly on the investment front, buying in the same suburb that you already own your home in- Yeah
or in the adjacent suburb, rather than looking at what's on the other side of town or- Yeah, in another city. Might be a little bit further aways, but doesn't mean that it's a bad investment choice. It could, more often than not. Like, what are the chances that the area you lived in, because that's where your mum and dad and you grew up and- yeah,
what's the chances that that's the best investment suburb- in the country or the, or the state? All the time. Yeah.Yeah, exactly. Unlikely. 'Cause everyone goes through, you know; otherwise, you know, nothing would get bought somewhere else. Yeah. You know? And a smart investor will rely on research and data. Yeah.
It might, the suburb might be perfect for you and your family, but it might not be for the masses.
Something that always surprises me when people come through the door is how little or lack of a plan some buyers have. They- Yeah, they just go, "I want an investment property." Yeah. All right. They've obviously come in with good intentions. Like, they obviously wanna create some sort of wealth through the purchase; otherwise, they wouldn't be having the discussion, but there's no clear path to get to it, or they haven'treally thought through on what the end goal is that they wanna get to.
They just figure buying a place is- everyone's dream gonna, gonna get them in front. Yeah. Which, okay, it will, but depending on where they are in life and what ultimately they want their end position to be, you need to lay out a plan to get there. There's gonna be a very different discussion and plan put in place for a 30-year-old trying to buy an investment property compared to someone who's 58 and is looking to retire in the next few years, right
Oh, that's me. Let's talk about your plan, Trent. Yeah. Well, we can use me as an example then- yeah, I suppose. So, you know, I went and worked up the Sunshine Coast for a couple of years for a business, running a real es- a real estate office. My wife and I decided, well, instead of renting for that period, do we look at buying into the market there?
Because long term, we've spoken about moving up to the Sunshine Coast. It's an area that we've holidayed a lot. So yes, we decided, "Hey, we're gonna buy a property there." But we had a few thought processes around it. So, if work circumstances changed, which,which they did, then, one was: was it gonna be easy to rent it out?
Is it in a, is it in a good location? Make sure that box is ticked. Is it something that we could live in down the track? Yep, make sure that box is ticked. We're probably, you know, 58, so a little bit more established, I suppose, in terms of our financial position. If we'restill working, could it be something that's used as a rental plus also for our own use?
So could we rent it out from February to November, end of November, and leave December and January empty for either us or our children, and things like that, to use as a holiday place? Buy it in a location where capital growth's gonna be a good benefit. So if it's not whatthe unit, the property that we're gonna live in in retirement, would we get enough growth out of it to sell it and buy something in the area that we would stay in long term?
So all those things that you have to take into consideration when you're buying- a property. So for us, that was only living in for a short time, but it's rented now. But we had a, a plan in place for how we're gonna use that and make sure that it-- we get maximum benefit out of the investment that we put into it.
Yeah. There is a clear long-term plan in that example, right? Um- Yeah, and again, I suppose the next part of a portfolio plan, which leads into our final, I suppose, of the seven points, is having a clear exit strategy. So when you're making your purchase, whatever that part of that plan is, is like, okay, what- when do we actually get out of this?
Like, what is the end out of this property? Because the reality is there will be an out, even if that out is death and passing it on to- yeah, your wife or kids. Passing it on to someone. Yeah. Like, there is an out, even if that is the out. So, understanding, obviously, having that plan in place leads to, okay, having a plan around the exit strategy for each property.
And I think the exit strategy is often overlooked by so many people. Yeah. Or the journey for that property. Yeah. What's it gonna do? Like, who's gonna be the buyer of that property when the time comes to sell? Because ultimately when you sell, you want that property to be something that is hotly contested and there's a lot of competition for.
Yeah, appeal to as many buyers as possible. Exactly. So- that's how you drive the competition, and that's how you get your best value out- Yeah of it when you sell. And if you're buying a property that doesn't have that today, what makes you think it's gonna have that in 5, 10,15, 20 years' time, wherever that comes into the picture?
Yeah. And what are you gonna do between ow and then to make it have that appeal? Or are you banking on a research in anarea that it's gentrifying and there's gonna be more appeal through that? Orbecause there is an infrastructure project- Yeah going in there and that'sgonna create that increased demand.
Like, again, where having the plan and a clear exit can be make-or-break on how successful a property portfolio ultimately is. Yeah. And if you're the owner of more than one investment property, you've got to apply that each time. Exactly. And depending on whereyou're buying, it can be a different strategy for each property.
They're not all gonna have the, have thesame strategy for them. Yeah. It's about being flexible. Again, re- we say it all the time: rely on the data and do the research. Yeah. I appreciate it. Ticking off a few things to avoid. Again, any questions, give us a shout. Happy to have a chat. Thanks.
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