Regional Investing-New South Wales..

I think you'll find the kickbacks are better... ;)

Yes I know all about that Allgood (I have had people offer me 20k per property to market new stock) but Mark says he is a buyers agent so I am curious about the boundaries, and whether he is actually a buyers agent or a marketer working for developers. I want him to have a fair chance to explain his business model.
 
Last edited:
Hi Matt,

We all know that all older property isn't better than all new property or vice a versa. But what our research has found is there is a small percentage of new properties that offers a less risky proposition than investing in older, more established property.

It is our belief that there is less uncontrollable risk in new properties, as opposed to older. This is not to say there are no risks, not at all, but we believe a lot of the perceived risks can be mitigate. But it's only our opinion and at the end of the day it's only one opinion.

Sure there are plenty of potentially great old investment properties out there, great if you want and know how to upkeep them, great if you are happy to have forgone $20,000-$30,000 in depreciation credits, great if you have the time to sort though the 250,000 properties on the market that are currently for sale.

After twenty years of investing in only older properties, I started to study how the new market worked and found that if you could do the right research there was a group of properties that had a better than average chance of out preforming the market. Don't get me wrong; There is a TON of rubbish for sale in the new market, and there are a TON of scumbags railroading newbie buyers with new property too.

Just because it's NEW doesn't mean it's going to be a ripoff, if you think that way then you are way, way wrong. There is really good capital growth to be had in certain areas by investing in new.

If you are serious about investing in new there is a lot of research to cover, you have to have up-to-date due diligence on:

  • Which areas to invest in. That means buying data, spending a lot of time researching on the ground to get the true picture of an area.
  • Have to have collected meticulous costings for each location you are considering buying into.
  • Have to have built a data base of previous sales and graded it for each of the characteristics required. i.e. m2, #rooms, aspect, floor level, car spaces, etc.. then analysed the marked for the demand to match the current supply
  • Done due diligence on which of the builders to use. That means getting their finished property lists, then inspecting a good cross section of their older properties at "open for inspections". We like to inspect 3-5 year old units and the same with houses, before we use a new builder.

No offence to Buyer's Agents and investors out there who don't like or buy new, there is client demand for both and I think both have their merits.

I agree Mark balancing Capital Growth and Cashflow across a portfolio is very important and its easier to make significant wealth via CG in short space of time.

I noticed in another thread some mention that you only market new properties? Can you tell us more about this or why they would offer better capital growth than older?

Thanks
Matt
 
From reading a few of your post it's clear that you specialise in new property as that is were you see the least amount of risk and you have found good growth.

Do you only specialise in new areas?

How does your buyers agency model work?

Do you receive any commission/benefits from the developers of the new properties you sell?
 
New areas = Not at all. We are looking for areas with big reasons to grow now and over the medium term. Like North Lakes QLD.

We negotiate an after settlement rebate from the vendor of 6%, which is 100% rebated to the buyer.
We charge a flat 4%
Leaving the property buyer with a NET 2% discount to market price.

We receive 0% from ANY other source, 100% from the buyer (as above)
Here is a link to an article I wrote on how we do our research: https://www.dropbox.com/s/yn9dhy9rsyv3t2m/YIP 87_54-57.pdf?dl=0

Do you only specialise in new areas?

How does your buyers agency model work?

Do you receive any commission/benefits from the developers of the new properties you sell?
 
If the vendors is willing to rebate 6%

What stops me from buying the property at a 6% discount on 'market price' therefor getting 6% NET.

Your link isn't working for me (possibly due to being on work computer). So your sole reliance is on commission paid from builders/developers that you then refund back to the purchaser for buying the stock.

Do you off a 4% charge on stock that isn't new?

Having a quick look on re.com alot of North Lakes stock on the market for $350-500k. Lets assume thats similar to the stock you put your clients into. That means you're receiving $14,000 - $20,000. How do you justify this commission? When you're just putting someone into a new property?

I understand that they get a 2% NET discount, but thats $7,000 - $10,000 savings. I would think if you're able to negotiate a 6% discount someone else could likely do 3-5% savings on their own without too much trouble.

Again I cant read your research because it's not working, but wouldnt your research have to rely on developers/builders coming to each area to be able to pay your commission for you to rebate to the clients?
 
with rpdata, you can search based on owner name for a particular suburb and divide against total listing to get a percentage of HC

Hi Retirerich101,

Do you mind walking through the steps in RPdata on how to get owner occupier vs HC in a listing? I have managed to check one by one in the street I am interested in and thats time consuming.

Thanks!
 
My two cents on new dwellings,

they are good if you are buying for a hassle free investment with depreciation benefits, for a buy and hold I think established is better

Pros
Hassle free, minimal maintenance
Warm and fuzzy feeling of buying brand new
Easier to find a better tenant
Depreciation

Cons
Land component is going to be lower then older dwellings (as a general rule)
Lower CG compared to established
No chance to value add
Higher chance of a fall in value as dwelling will be second hand in a few years thus being no different to something thats 3 years old today

Definitely I would never buy brand new for investment, unless its an area I know is going to boom.....of which id probabl still buy established
 
Hi Retirerich101,

Do you mind walking through the steps in RPdata on how to get owner occupier vs HC in a listing? I have managed to check one by one in the street I am interested in and thats time consuming.

Thanks!

I PM'ed you the instructions for the search
 
I read the article. It makes sense.

Its mostly quite similar to the kinds of things I look for property girl. If that methodology is fairly applied I think many of the risks of buying dud properties or buying at the worst point of the cycle are minimised, regardless of the type of property in question or the fee structure. Those are separate issues.
 
Dubbo anyone?

I have been looking at Dubbo for past month. I can get a decent 3 bedder for 250K mark, with yield of 6-7%. The vacancy rates hover around 1-2% mark.

What are your thoughts on that area?
 
If the vendors is willing to rebate 6%

How do you justify this commission? When you're just putting someone into a new property?

Again I cant read your research because it's not working, but wouldnt your research have to rely on developers/builders coming to each area to be able to pay your commission for you to rebate to the clients?

Brady,
To answer your questions: Real estate agents charge between 2% & 3.3% depending on whether they are metro or regional. And we all know how much work a real estate agent puts into a single transaction.

We charge a flat 4% + gst. We are a one fee business, we only get paid by the buyer and keep no other fees from any other source.

For our fee we do the market research (and lots and lots of it), by that I mean we look across the whole country and select one area to buy houses in and one area to buy apartments. Yes they are both in Queensland at the moment, we stopped buying houses in Western Sydney and apartments in Epping, NSW two years ago.

After narrowing down the next area (LGA) we will be buying in, we create a short list of developers. We look at who has land, and who is building stock a good 12-18 months before moving into a new market. Reviewing how much potential land stock is available to come on the market, sourcing data on who has building approvals, as well as looking though the current developments and land blocks to narrow down the best of whats on offer.

The next step is quality grading developers completed product, we do this by visiting rental open-for-inspections on their older buildings to get a better understanding of the quality of what they are building. Also taking the opportunity to surveying neighbouring owner-occupiers what they think of their apartment while we are there.

We then select the house designs or apartment floorpans that best suit the target demographic for the area, for a house design the selection process also includes fixtures and fittings, types of air con, etc.

For apartments we go back over past sales data and collect square metre sales prices to create a sales trend history to track the square metre rates being charged for new buildings coming onto the market in that given area. As an example for Fortitude Valley we have 1600 apartments graded and adjusted for floor level, aspect, car space, etc.

When we get given a set of floor plans for a new building (up to three months before being released to market for sale) we go though all the individual apartment floor plans and calculate all the square metre rates for each apartment, floor by floor to find the best value in the building. We then reserve those best "value" apartments on the first morning of release to the market for clients on our waiting list.

We get rental appraisals from all the major agencies in the area, as well as visit open for inspections of comparable stock. We track the rental market for 6-12 months before we start buying.

Once the client wants to go ahead, we help the client to get the best finance deal using 3rd party mortgage brokers, oversee the conveyancing process, help with document signing, manage funding drawdowns to builders, seek rental management quotes from the local agents, oversee the rental manager's letting progress, organise the final building inspections and oversee defect rectification, key handover and that the property is tenanted in a timely manor.

I don't how many hours we spend on each purchase, my guess is 100-120hrs from start to finish for a house and land, 80-ish hours for an apartment.

This whole process requires five well qualified staff to manage 8-10 transactions per month. Whether what we do is good value or not depends on how much time and knowledge you can bring to the table when selecting a property for yourself.

To answer the last question you asked: When an area is about to take off the local builders and developers are well aware of whats happening and have their fingers crossed that it's about to be their turn. They have been gathering stock for a while and are waiting for the crowds to arrive so they can finally trade their land.

To be clear, I am a property investment advisor and my partner David Ward is the licensed buyer's agent.
 
Last edited:
Back
Top