Hotspotting or Timing the Market
- Thread starter LisaP
- Start date
Hi Bigtone, have you had any success with regionals when the yields haven't been up around 7% but the area has ticked a number of other boxes?
Hi Bigtone,
Thanks for sharing.
Have you checked out Terry Ryders hotspotting reports? www.hotspotting.com.au.
If so, how does your research compare to his? Are they somewhat consistent?
David.
Thanks for sharing.
Have you checked out Terry Ryders hotspotting reports? www.hotspotting.com.au.
If so, how does your research compare to his? Are they somewhat consistent?
David.
Great thread - thanks Lisa/Bigtone.. 
I guess some of this criteria can be applied at both the macro (eg. city) and micro (suburb) levels.
I have some questions relating to the Wages to Value ratio.
1) I assume this is calculated based on the % of avg gross wages for a person in that region/city required to service a loan for the avg priced property in that region/city?
2) What would you consider to be an acceptable ratio? The bears argue that this ratio is out of whack (hence, aren't purchasing properties at all), so I'm interested in your thoughts. Or do you simply use it to compare against other cities in a relative manner?
Thanks
I guess some of this criteria can be applied at both the macro (eg. city) and micro (suburb) levels.
I have some questions relating to the Wages to Value ratio.
1) I assume this is calculated based on the % of avg gross wages for a person in that region/city required to service a loan for the avg priced property in that region/city?
2) What would you consider to be an acceptable ratio? The bears argue that this ratio is out of whack (hence, aren't purchasing properties at all), so I'm interested in your thoughts. Or do you simply use it to compare against other cities in a relative manner?
Thanks
Hi Garbage,
I bought a place in Townsville in 2005 for $213k that went to $375k within 24 months and is now $360k and rental yield in the area at the time was around 6% so really not far from the mark and it ticked the other boxes. The one I bought only had a 4.5% yield but it is on a corner block and they told me I could put 6 units on the back behind the house!, I didn't believe that but thought it was certainly a development site of some sort and I like buying those for growth. ( It is on a mainish road so maybe Dazz will buy it off me and put a petrol station on it!)
I think lifestyle regional areas such as Ocean Grove and Barwon Heads have had massive growth last 18 month although they don't seem to be getting much press. Yields very low but these lifestyle areas move on different factors
altogether (mostly ripple effect of prosperity of closest major regional cities or capital city and take a bit of skill to get right.
Don't know if that answers your question but I tried!
Cheers
Hello DavidMc,
I have seen a bit of Terry's stuff and agree with most of it. Unfortunately I agreed with him on Hervey Bay which he has talked up for years!What makes it hard for him is he has to predict heaps of hotspots to sell his reports and write his articles etc.
This has a great effect on the quality as he has to make too many "guesses". Any good professional punter will say you don't bet in every race just choose the best couple that meet the criteria and load up on them". In a way Terry is tipping in every race. If you spoke to him personally obviously he wouldn't invest in all the areas he mentions but would pick and choose the best few, unfortunately he is bound to making lots of predictions and that in my opinion dilutes the value.
I could be very wrong just my opinion.
Cheers
Hello Rickardo,
In terms of Hotspotting or timing the market I would not be buying in Melbourne at the moment, I believe much better hotspotting opportunities available elsewhere.
Melbourne met my criteria at the end of 2006 start of 2007 and I bought up then. I had always bought elsewhere and was determined to get a good piece of my own city when I thought the time was right. At that time Melb ticked all boxes (all ten at that stage) so I loaded up. End of 2007 and the GFC hit and all the properties I had just bought went down 10% approx.
I looked at the criteria again and taking some of Warren Buffet's advice I "bought when others were panicking" and doubled up with another $2m of Melb property . I had a few sleepless nights as the weight of all the surrounding negativity got to me but glad I stuck to my guns.
I gave a presentation in Feb 2008 titled " Melbourne Bluechip a once in a generation opportunity" might have been overselling that
but probably trying to convince myself as well but my points were that all the fundamentals were very strong except we had been hit by a global event. I had no idea it would turn back so quickly I just believed that when it did it would move very fast.What made me confident was as I said the fundamentals were strong but the "fallen bluechip" meant you could buy in the best suburbs and prices greatly discounted from previous highs and there was basically no competition and some distressed sales so bargains galore. The GFC seemed to hit the more expensive suburbs harder.Other factor was market hot 2-3 years. I believed Melbourne had been flat 3-4 years before 07 then had a massive year and then hit by GFC so really without the GFC the boom still had 2 years left. In effect if you ignore 2008 the local factors have caused the boom to be 2.5 years so far 2007 and 2009 and first half of 2010 so realistically how much longer can Melb boom go?
I went to Sydney early 2009 and saw many signs of Melb early 2007 and thought it would be great buying as it ticked all boxes, due to difficulty in buying in NSW, having maxed out buying capacity in Melb, tightening of finance etc and other factors ( gee I normally bag people who make excuses about not buying!) Basically I was lazy and I am still trying (through a buyers advocate, missed at auction AGIAN on Sat, I am going to buy 2 and will pay $125k more on each because of my inaction, if I was on this forum then I would have found Propertunity and used him as my BA and be laughing now)
I want a piece of Syd so will be buying there but consider Brisbane best capital city for buying currently but I am heavy in QLD (mostly regional) so need NSW first.
I am trying to upgrade PPOR at moment but that is only property I will buy in melb for now. If you really want to buy IP in Vic consider Footscray In Metro and Philip Inland and Rye and Ballarat and Bendigo for Regional.
One thing I have noticed in Metro is that some properties are slipping through the net and being sold for prices 10-15% lower than comparable ones in same street ans Suburb etc, investors who are doing the hard yards are being rewarded with good buys that long term will be great. I think Melb will have good long term growth but from a hotspot point of view this window is closed.
Just my opinion.
Cheers
Bigtone
Great thread - thanks Lisa/Bigtone..
I guess some of this criteria can be applied at both the macro (eg. city) and micro (suburb) levels.
I have some questions relating to the Wages to Value ratio.
1) I assume this is calculated based on the % of avg gross wages for a person in that region/city required to service a loan for the avg priced property in that region/city?
2) What would you consider to be an acceptable ratio? The bears argue that this ratio is out of whack (hence, aren't purchasing properties at all), so I'm interested in your thoughts. Or do you simply use it to compare against other cities in a relative manner?
Thanks
Hello R35,
1, Yes that is correct.
2, Anywhere in the low 30's and also what the figure when the last boom stopped as in 41 in Sydney 2003.
On a micro level you can also find out the what percentage of property has debt against it, the lower that is, combined with a lowish wages ratio and that suburb looks good to me. There are suburbs were 45% or more of properties have no mortgage, that is great protection against drop in prices if rates rise as they have no mortgage so won't need to sell, some of these new suburbs 95% of properties are financed, huge interest rate risks plus 10 or so other reasons why I would not touch them!
In terms of your question I look at both, acceptable ratio and the capital city comparisons. I don't really rely on it in regional areas as different factors are at play.
When I started I invested pretty much on feel and vibe and have tried to make it a bit more scientific as I had more data I could check back against. For now I only have to convince myself but a dream of mine is to "retire" at 40and start or run a "Residential Property Trust" that could eventually become listed on the stock exchange, I think residential property is pretty much ignored by institutional investors and would be a good way for many people to diversify their super or other investment. I would love to do the property selecting for such a fund, It would be great fun buying 50+ properties a year
I tried to get a small fund off the ground in 2004 when my own borrowing and equity was maxed out but thought there were some great opportunities that I wanted to at least buy even if not with my money!. With the fund I was going to buy 5 in Mackay and 5 in Perth which would have been great and could have multiplied from there however I couldn't raise enough $$ and binned it. My dream is a big bigger now!All these questions make good practice as I can imagine the grilling from the fund managers would be intense and "vibe and feel" probably wouldn't cut it
Hi Bigtone
once again, great posts and thanks for sharing.
Propertyunity finding me property in NSW at the moment, he is good at this and I find NSW seems a different beast and hard to get into.
As far as Brisbane goes which areas do you believe have great opportunities for CG, I was looking at North Brisbane. Would like your thoughts on this.
Cheers, MTR
once again, great posts and thanks for sharing.
Propertyunity finding me property in NSW at the moment, he is good at this and I find NSW seems a different beast and hard to get into.
As far as Brisbane goes which areas do you believe have great opportunities for CG, I was looking at North Brisbane. Would like your thoughts on this.
Cheers, MTR
Hi MTR,
Yes reading Propertunity's post he does seem on the ball.
Brisbane meets my criteria as a city as a whole in terms of actual suburbs I will be looking for 2 bedroom apartments 2-10kms from the city. I don't know Brisbane very well and most of my QLD investments are regional. I am very confident Gladstone will go up a lot this year starting around July. I have a few there so won't buy again but for someone starting out it might be a good place to buy a cheap house for low $300's.
In Brisvegas my uneducated guesses would be Windsor under $360k, Wollangabba and New Farm and Bulimba
Windsor around $350k 4kms from the city, would be happy to load up there on stuff like this.
http://www.realestate.com.au/property-unit-qld-windsor-106458654?tm=1271060437&c=6621946
Cheers BigTone
Yes reading Propertunity's post he does seem on the ball.
Brisbane meets my criteria as a city as a whole in terms of actual suburbs I will be looking for 2 bedroom apartments 2-10kms from the city. I don't know Brisbane very well and most of my QLD investments are regional. I am very confident Gladstone will go up a lot this year starting around July. I have a few there so won't buy again but for someone starting out it might be a good place to buy a cheap house for low $300's.
In Brisvegas my uneducated guesses would be Windsor under $360k, Wollangabba and New Farm and Bulimba
Windsor around $350k 4kms from the city, would be happy to load up there on stuff like this.
http://www.realestate.com.au/property-unit-qld-windsor-106458654?tm=1271060437&c=6621946
Cheers BigTone
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I attended an auction nearby for a 2br unit recently, a very well contested auction. A unit in better condition sold in the same complex for 12% less only 4 months ago. Pretty strong market and a owner occupier was determined to buy it with a 20k overbid for the final bid.
For what it's worth RPdata premium property pulse (a paid subscription option from RPData ) in February mentioned Windsor as a hotspot for units. If anyone is interested in the article just pm.
I've never really liked those streets north of Rosemount Hospital....but acknowledge it is cleaning up there.....
the west side of Lutwyche Rd is more convenient to Wilston and Winsdor infrastructure and shops.... And the $Lutwyche Shopping precinct has been grubby since the 70s....though changing too....not as many adult shops and tattoo parlours as before.
Thanks very much for the encouragement, Bigtone. Hooray also for a certain property professor of UWS. When we bought our PPOR most of our friends thought we were nuts and that we were spending way too much. It's very strange how the situation can change so quickly, I still have a lot to learn about the economics of property prices!
PM'd you Bigtone.
