Where can I get data to assist in selecting area to invest in???

[mixedup]

Hi all,

I was hoping I could get some pointers to kick-start me into deciding where to look for my 1st IP in Brisbane. I'm thinking that what I'd like to somehow get access is is the following:

METICS FOR JUDGING A GOOD RENTAL PROPERTY

1. Yield - This seems to be popular. Is this the best metric to use / look for in magazines reports etc? Also what typical targets does an average investor use (e.g. 5% for yield?)

2. Other metrics that I should look for, say if I in reports that list figures per Suburb?

PROPERTY VALUE/PRICE INFORMATION

3. Graphs/Tables of average house/unit prices IN THE PAST (e.g. for the last 5 years) per Suburb? Where/how to get? Can I get this info for free? (e.g. particular magazines, publications) [My thinking is to use this to identify areas that have already appreciated ahead of other areas. In other words to help point out areas that are lagging in their appreciation relatively speaking]

4. Future Projections (Graphs/Tables) of average house/unit prices per Suburb (or for a limited set of Suburbs)? Where/how to get? Can I get this info for free?

RENTAL INFORMATION

5. Graphs/Tables of average house/unit rental prices IN THE PAST per Suburb? Where/how to get? Can I get this info for free?

6. Rental vacancy rates, to get feel for how easy/difficult it would be to re-rent? I guess one only needs a current snapshot for this item, no need for history?

INFRA-STRUCTURE IMPACTS

7. How to identify whether particular suburbs have upcoming infra-structure investments, local government initiatives that would be a positive

RENT AS IS versus RENOVATE

8. I'm not sure if there are any stat's for this item, but is there a general rule of thumb re what is best here. For example if one had the personal time to arrange renovation tasks (monitor things), can you generally do better if you buy a place that costs say $20k less and then use this money to renovate? Or is this one of these "well it depends" type scenarios?


I think these are the main things I need pointers on. Everything else I'm hoping is more straight forward, i.e. actually buying, shopping around for a good loan, etc.

Regards
Greg

 

[alexlee]

Greg, have you ever thought about, well, just going out and buying a place? Think about this: will you do better in the long run just buying places you can afford to hold for the long term, or analysing everything to death until you find the 'perfect' property?
Alex

 

[Property Mogul]

analysis paralysis

 

[cougar_01]

Reports

Residex, RPdata and street sales.com. Dont forget to log on to the areas local council site and checkout future developments and population demographs.
Cheers Cougar

 

[dajackal]

Some free stuff I've come across from various posts. Could others share their resources too???

http://www.prdnationwide.com.au
click on their research section and you should be able to get price history and rental yield information for free, albeit slightly outdated.

http://services.news.com.au/dailytelegraph/property/guide.do
check there for their "investment rating" for particular suburbs. not sure what they use to measure it though.

 

[YIP]

Residex, RPdata and street sales.com. Dont forget to log on to the areas local council site and checkout future developments and population demographs.
Cheers Cougar

sounds like brilliant advice to me!

look at the data, check out development, and see if you like the area (gut feeling). If things are looking good, take the leap. alexlee sounds right - if you analyse everything, you'll never actually buy.

 

[Jacque]

Greg, have you ever thought about, well, just going out and buying a place? Think about this: will you do better in the long run just buying places you can afford to hold for the long term, or analysing everything to death until you find the 'perfect' property?
Alex

Analysis Paralysis can hit some investors, however there's no need to take a total laissez-faire approach Some amount of due diligence is required; after all we're not talking here about a sofa purchase

Getting the balance right on research is important, and I believe that the first stop should be your broker/lender, Greg.
Once you've ascertained budget (and your likely out of pocket cashflow costs per annum) then you've narrowed down your areas and can begin to look at the other factors you've mentioned.
Residex is a good starting point, to research past cap growth and rental yield rates, as well as overall views on the current and past market.
Read as much as you can, talk to other investors who've got experience and be realistic about costs. They've been lots of threads on "due diligence" on this forum. If you type this into the search option, you can read all day

 

[alexlee]

Analysis Paralysis can hit some investors, however there's no need to take a total laissez-faire approach Some amount of due diligence is required; after all we're not talking here about a sofa purchase

I'm looking for a sofa right now, in fact. I'm far pickier about my sofa than an IP.
Alex

 

[Jacque]

I'm looking for a sofa right now, in fact. I'm far pickier about my sofa than an IP.
Alex

Well lucky I don't work in any furniture stores, Alex.
You'd drive me crazy!

Try Everyday Living if you like bartering
I got a great deal there for my latest acquisition....

 

[alexlee]

I'm not the one that's living in the IP, so I can be objective about it. That sofa is going to sit in my living room.
Alex

 

[DavidMc]

I'm looking for a sofa right now, in fact. I'm far pickier about my sofa than an IP.
Alex

I'm not the one that's living in the IP, so I can be objective about it. That sofa is going to sit in my living room.
Alex

They both have the potential to be a pain in the a**...

 

[mixedup]

cougar_01, dajackal, Jacque - thanks heaps

 

[Nanuq]

I'm not the one that's living in the IP, so I can be objective about it. That sofa is going to sit in my living room.
Alex

Hi Alex,
I hear all the time "IP is all about the yield" , but what about the capital return of the IP? I know that its all paper profit untill you sell the property and when you sell CGT occurs. But when your IP has strong capital growth, you can draw out the equity by refinancing your loan which will enable you to invest in more properties.

Generally, you got to be picky with location, infrastructure growth, floor plan, building, facing aspects etc... when you want to pick a property with great capital return and you need to be subjective about it by considering what kind of people does this property attract. Attractive houses are easier to rent out and usually fetch a better rental return.

Roughly the rental yield difference between units and houses are approx 1-2%but the capital growth differences are usually greater than 2%. This is why I would put capital growth higher in priorty when choosing an IP.

 

[mixedup]

so in general would you buy a house a little further out from CBD then a unit closer in? (ie for the same money)

 

[alexlee]

Hi Alex,
I hear all the time "IP is all about the yield" , but what about the capital return of the IP? I know that its all paper profit untill you sell the property and when you sell CGT occurs. But when your IP has strong capital growth, you can draw out the equity by refinancing your loan which will enable you to invest in more properties.

I agree. I do refinance to take out equity. IP is about yield in that a high yield makes it easier to hold the property.

Generally, you got to be picky with location, infrastructure growth, floor plan, building, facing aspects etc... when you want to pick a property with great capital return and you need to be subjective about it by considering what kind of people does this property attract. Attractive houses are easier to rent out and usually fetch a better rental return.

I assume everything grows at 7.2% over the long term. You may not agree with that, and that’s fine.

Roughly the rental yield difference between units and houses are approx 1-2%but the capital growth differences are usually greater than 2%. This is why I would put capital growth higher in priorty when choosing an IP.

2% yield is a BIG difference in terms of your serviceability. Can the gains on a $300k house yielding 3% beat the gains on 2 x 250k units yielding 5%? The numbers are arbitrary but my view is that higher yields mean greater serviceability, so you can buy more property (in terms of $) if you go for higher yielding stuff.
Alex

 

[Nanuq]

i agree with you on the servicebility part. that is why when I look for IP, I look for houses with yield that is not too much lower than units, houses close to but not too close to shops, transport and school is always a plus.

Alex, do you invest in areas you dont know well? I guess when you do that, the safetest bet is to look for a property with high yield, you cant go wrong with that.

 

[alexlee]

i agree with you on the servicebility part. that is why when I look for IP, I look for houses with yield that is not too much lower than units, houses close to but not too close to shops, transport and school is always a plus.

Alex, do you invest in areas you dont know well? I guess when you do that, the safetest bet is to look for a property with high yield, you cant go wrong with that.

I've never invested in the same city where I've lived. Bought in Brisbane when I was working in Sydney. Bought in Brisbane and Perth when I worked overseas. Recently bought my PPOR in Sydney.

If you just want high yield you can go country. I prefer to remain in the cities. I also prefer lower priced properties, which tend to have higher yields. I don't subscribe to the 'better suburbs have better growth' argument.

Nanuq, what have you invested in other than your place in Sydney?
Alex

 

[Nanuq]

I've never invested in the same city where I've lived. Bought in Brisbane when I was working in Sydney. Bought in Brisbane and Perth when I worked overseas. Recently bought my PPOR in Sydney.

Is there any special tax benefit from doing this?

Nanuq, what have you invested in other than your place in Sydney?
Alex

No, I am currently looking to buy in innerwest within 5km of where I currently live. The market has been very strong in the past 12 months, it has gone up by approx 10%, and I find it strange that the price still goes up dispite the interest rate rise. I found it abit hard to pull the trigger in the current market condition...

 

[alexlee]

Is there any special tax benefit from doing this?

Each state has its own land tax threshold, so if you spread your purchases around you pay less land tax.

No, I am currently looking to buy in innerwest within 5km of where I currently live. The market has been very strong in the past 12 months, it has gone up by approx 10%, and I find it strange that the price still goes up dispite the interest rate rise. I found it abit hard to pull the trigger in the current market condition...

As I've said in another post, I just decide to buy, and look for an area I would want to buy in now.
Alex