We recently sourced an excellent duplex purchase in SE Brisbane with a purchase price of $405,000. As part of the settlement process the client had to have the property valued by his bank to secure his loan. The property received a bank valuation of $440,000! Needless to say the client was ecstatic with the result and has effectively made $35,000 in equity on the way in (minus closing costs).
This prompts the discussion of how do you set yourself up to find those proverbial “needle in a hay stack” properties which can potentially provide you with instant equity rather than relying on the capital growth of a market to drive up your equity position.
Pure Property Investment (PPI) works of a stringent criteria to give our clients the best chance of sourcing properties that may be overlooked by the average investor and provide the greatest chance of an under market value purchase. The initial step is to refine your research to focus on only one or two Local government areas (LGA’s). Rather than being a jack of all trades l, we find a much higher rate of success focusing our attention on a small number of LGA’s. Once your LGAs have been decided upon, it’s time to really start your “deep dive research”. To give you the best chance to truly understanding the value of all types of properties and where the highest level of demand lies in your chosen investment areas you need to know your data. This should be focused on but not limited to:
LGA and individual suburb median house prices for 2,3,4,5 bedroom houses (including trends over the past 1,3,5 and 10 years)
Minimum subdivision regulations for both land size and densities (if you are looking at potential development sites)
Demographic breakdowns of the predominant resident types i.e. age groups, average earnings, ratio of owners to renters
Access and proximity to local schools, rail, arterial roads, parks, flood mapping
Current and future employment opportunities (these details can typically be sourced through local, state and federal websites
On top of this list, nothing beats local knowledge and a strong network of both real estate agents and property managers to gain insight into the desired and non-desired areas along with the aspects which might not be obvious to the naked eye (problem areas for tenants, youth unemployment, poor local schools, and new development approvals).
Now I know this looks like a very time consuming process (and it is). But if you truly want to put yourself in the best position possible to buy those under market value properties, having a comprehensive research backing and local area knowledge is absolutely vital in giving yourself the best chance to grab a bargain.