How to decide "where"

Hi everyone

Im currently looking for my 2nd IP and for this one am looking outside the area i live (sunshine coast) as I'm hoping to find something with better cashflow than my first IP.

I'd love to know how others start their search for areas/suburbs to invest in. Whilst i'm looking at cashflow, capital growth is also important and my strategy is to buy and hold (perhaps adding value by cosmetic renos if nec).

I regularly buy the API mag and have started looking at the numbers towards the back for good yielding suburbs - is this a good place to start?

Thanks
Kaia
 
usually I would like to check things as below:

1) Suburb's History average capital growth, minimum 10 years. shall be more than 10%.

2) What point current market is located on the suburb's cycle I'm looking around and find the potential soon up-suburbs (of course can only estimate).

3) And among those suburbs, pick up those I can afford and have the best infrastructure

and so on.....
 
Ryan
Before you get to your first point 1. re the suburb history - how do you choose the suburb/s in the first place?
Kaia
 
Ryan
Before you get to your first point 1. re the suburb history - how do you choose the suburb/s in the first place?
Kaia

You go through the entire list - we used to do this for Melbourne. i.e. obtain the Valuer General report, and highlight every suburb > x% growth over a 10 year period.

Cheers,

The Y-man
 
Y-Man
Thanks for this. That's what i've been doing - I've been using the API mag and looking at QLD HOUSES and highlighting suburbs with xx% yield and xx% 10 year growth. Glad to know I'm on the right track!
thanks again
Kaia
 
Y-Man
Thanks for this. That's what i've been doing - I've been using the API mag and looking at QLD HOUSES and highlighting suburbs with xx% yield and xx% 10 year growth. Glad to know I'm on the right track!
thanks again
Kaia

I wish your eyes well. It must be an age thing, but I'm sure that data has got smaller!
 
Y-Man
Thanks for this. That's what i've been doing - I've been using the API mag and looking at QLD HOUSES and highlighting suburbs with xx% yield and xx% 10 year growth. Glad to know I'm on the right track!
thanks again
Kaia

This is probably a silly question - but what would be consdiered good "xx%" numbers ?

I know it is almost certainly subjective but I am curiouse to hear what people think.
 
This is probably a silly question - but what would be consdiered good "xx%" numbers ?

I know it is almost certainly subjective but I am curiouse to hear what people think.

I would consider at the absolute minimum 5% gross rental return and 7% PA capital growth for last 10 years.

That makes it 12% gross return without including holding cost. Which should be less then 12%. Then if you add compounding of leveraged money and a timeframe of 7-10 years you would get a pretty healthy return even at a modest 12% return compounded annually.

Cheers,
Oracle.
 
Look for those strong performing suburbs and then pounce on them when they have a pullback in price (if they do). Riding the long term trends will reap rewards. There were a lot of suburbs that filled this criteria about 6 months ago...now most of them have bolted off again.
 
Look for those strong performing suburbs and then pounce on them when they have a pullback in price (if they do).

Aren't you better watching suburbs in decline for a turn around? It could take years (decade?) before a suburb stops growing and turn around. Looking for those close to bottoming out - that have potential for growth again, but were just undergoing a correction - would make it much quicker.

Cheers
Greg
 
I would consider at the absolute minimum 5% gross rental return and 7% PA capital growth for last 10 years.

That makes it 12% gross return without including holding cost. Which should be less then 12%. Then if you add compounding of leveraged money and a timeframe of 7-10 years you would get a pretty healthy return even at a modest 12% return compounded annually.

Cheers,
Oracle.

Hey Oracle
That's good to know, thanks. I've been looking at 5.5%+ and around 15% growth.
 
Y-Man
Thanks for this. That's what i've been doing - I've been using the API mag and looking at QLD HOUSES and highlighting suburbs with xx% yield and xx% 10 year growth. Glad to know I'm on the right track!
thanks again
Kaia

Hey Oracle
That's good to know, thanks. I've been looking at 5.5%+ and around 15% growth.

Hi Kals,

In both your comments above, you are showing that you are "very smart".:D
I'm happy for you.
 
Hi Kals,

In both your comments above, you are showing that you are "very smart".:D
I'm happy for you.

Sanjayag
Thanks! I've only just started as my first purchase was a local one. I'll see how I go - I'm still tossing around the idea of using a buyers agent.
Kaia
 
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