Dax Stanley from HERA Property breaks down three questions to screen properties for profit: lowest seller price, weekly rental rate, and local vacancy rates. Calculate annual rent times 52, divide by purchase price, and aim for yields above 5.5% to justify further investigation.
Chapters
Hey everyone. Today I've got three questions to ask when you're looking to buy property to actually make sure that you're buying something that makes money to ask. And so I really want to explain this to you because it really helps you make sure find out a property is profitable or not really quickly and then move on. And so, hi, I'm Dax Stanley. I work founding director of HERA Property and Making wealth for People. So these three questions I've built up over years and years, just go straight for the jugular, see if it's going to make you money and then if it's not, move on. So let me get into those straight away because I know, you know, you can really do a lot of analysis into, you know, about the property and the suburb and all this sort of stuff to get to the point you go, oh, it's not going to make me money. So I've really shortcut this whole process to make sure that straight away you know the questions to ask, then you can do the calculation and if it gets above the magic number, great, then ask all the other questions and do all the other research. Otherwise, nah, move on to the next one because you don't want to waste your time in this space. Okay, so the first question to ask, and this is a cheeky ask, as always with the Aussies you want to make money, is what's the lowest price they will sell at? Okay, now this is a good one to start the negotiation. If you get into the negotiation, part of what we do, you never state a price, let them to do it first. And they know this tactic as well. So there's a couple of things you need to go around this, but firstly, get the lowest price, that is key. Okay, and the second one is what can it be rented out at? So per week, okay, what can it be rented out per week? Now the real estate agent that's selling these properties, they will give you a rental appraisal, as it's called a rental appraisal, but get your own independent one because you know they could be skewed in terms of maybe a little bit higher than what it should be. So go into real estate, we go through those steps in another thing and then third one we want to know is the vacancy rates. Okay, now vacancy rates want to make sure it's like under two weeks in the suburb because you don't want your property to be left empty for too long because you know then you'll be paying the mortgage. Okay, so once we've got those, we've Got the tick. We've got those answers, we get onto the equation. So what I want you to do here is I want you to take the weekly rent, rent and then times it by 52. Why do we times by 52, 52 weeks? We want to get the yearly rent. How much money will this be, this, this property be bringing in for us? So once we've got that, what we want to do is we want to divide that as a division line, okay, by the asking price or the, you know, the, the, the lowest price. If you got the lowest price, great. So we take that, we plug that in there, we take the rent per week, we plug that in there. And what we get and what we do is we take that as a percentage. So we times that by a hundred, okay, to get the magical number that we want to look for, which is the rental yield, okay? This is key for investing in property. The rental yield is based off a percentage, okay. And that rental yield shows you how much money you're going to make. Okay, now we've got a magical number that works out. If you've got a number, if a certain percentage above this number, then it's worth considering. And you start going into step three, which is all a drill down in more data and all this sort of stuff. I've got a whole flow for you there. If it's below this, flick it and get onto the next one straight away. So this magical number that we work from is this, so 5.5%. Now this, this number here is magical, okay? You know, I've found many, many times you get to this number and you go through it and you get, you know, four, you know, maybe five. You get into the research and yeah, it's not going to make you money, but this makes you money. Well, may make you money, I should say. So this is where you get to the next step. You. Okay, it's above 5.5. Great. Then I start drilling down into more data. So I hope this has really helped you determine, you know, those three questions to ask straight away, you know, to get the equation for you there that gets you this magical rental yield. That's the magical number that we're looking for over here. Okay? So I hope that's really helped. If you've loved this, please comment below and I would love you to share it with somebody that needs this, that's interested in property and, you know, may need some more help in that space. So thank you very much and I look forward to helping you growing your wealth.
