Borrow My Brain - Edel

Hello, and welcome to Borrow My Brain. I hope you are enjoying this series, and if you would like to watch some of the past people that we have had on Borrow My Brain, then please look around this video because you will see an area that you can click so you can go to that playlist and watch their stories. Now, today I have another person who has posed a question for me, and that is Adele and her husband, who are looking to buy their first home. Now, with a bit of a twist, they want to convert this to an investment property in the future, which is fantastic. What it allows them to do is to put the investor mindset on when they're looking at the suburbs to buy in. So they're looking for growth potential, but also making sure that they have the necessary filters that we look at so that they are going to get renters in. So we're looking at vacancy rates, we're looking at the demand, and the typical type of renters for those areas. Now, another little twist that she threw me, and that is that she's going to engage a buyer's agent, and she had a few referrals from different people. She was looking to engage a buyer's agent. However, like most people, you know, they engage a buyer's agent, and then by virtue of where the buyer's agent has their relationships and expertise, they end up with the property. And what I coached Adele in today was actually looking at where she wanted to buy and and then finding a buyer's agent that has expertise in those areas. So lucky for her, a couple that she's spoken to actually have expertise in the areas that we identified for her first home in Melbourne. So I hope you enjoy the Borrow My Brain today. And remember, if you'd like to apply for Borrow My Brain, please do so look below this video and click the link. We would love to be able to help you and answer your questions and obviously help others by listening to our discussion. So let's hear from Adele. Hello, everyone, and welcome to Borrow My Brain. Now, today I have Adele with me, and Adele has an interesting question. Adele, over to you. How would you like to borrow my brain today?

Hi, Jane. Thank you very much for the opportunity. I think I'd like to be able to clarify, I suppose, our buying criteria because I think that's probably stumbling us in our being able to define what we want and where we want to focus on.

So where are you at the moment? You're thinking about buying an investment property or a home or we are buying.

A home that will become an investment property in Melbourne, we've just received our borrowing capacity again. That was probably a big gray area because we didn't know what we could borrow. So we now have that this week. So luckily we know what we can borrow. We're looking at 750 max in Melbourne.

Okay. In Melbourne. Fantastic. And so have you bought a property before?

Never bought a property before. So.

You know, one of the things I really like about this is that you're thinking as a first time buyer, as a first time investor, even though you're buying your first home. And you know, I kind of, in 2019, I had this kind of revelation that had been teaching investors for the last 10 plus years about how to invest and how to, you know, look at properties, et cetera. And you know, I came across a number of nurses and people who were buying house and land packages as their first home. And I was thinking, gosh, if I could teach them to think as an investor buying their first home, they'd be so much further ahead. So the fact that we can get you now and this kind of mindset is fantastic. Actually, I'm going to share my screen with you because I'm so excited about this. I'm going to bring up an image that I have that I created as a framework for first home buyers. Because I think that, you know, when we actually look at the way that first home buyers can purchase, if they start with that, that vision of understanding how this property fits into, you know, not the next 30 or 40 years, but the next one to three years, we, we can see that this is going to be a home for you. How long do you think you'll be a home for before it becomes something else?

I would say it will be between four and five years.

Okay, perfect. So you've got the home. It gives you then the opportunity to at that stage maybe go, well, I've been bought it like an investor so I can actually sell it and put the money into upgrade of, you know, closer to the dream home. Or I bought it as an investor and I could park this as an investment opportunity. And whilst it's an investment opportunity, it's going to allow me to be comfortable that I've got that money keep growing. I could take some of the equity out to buy my own home. So you know, there's all of these different options that you have if you buy your first property. Well, you don't have to sell it, you don't have to keep it, but you've got choices, which is good. And like when I just go around the framework If I look at, you know, setting it up, you know, one of the things that you mentioned around borrowing capacity is that, you know, you can get onto the calculators and you can have a look, but you never quite know, you know, if you're being assessed what that really looks like. So, you know, getting your borrowing capacity done by a mortgage broker or by a lender that's going to give you the full assessment, you know, you know, going in, you've got 99% chance of getting the loan as opposed to getting on a calculator and going, oh, not too sure. Yeah. And you guys have been saving for quite a while as well, haven't you?

Yes, three years.

Diligent. And then we talk about the source it part. Now you're going at a low. I think you mentioned a little earlier that you almost. You're thinking also about buyer's agents.

Yes, probably. Yeah, we can afford it and I think we're under a timeline that we're on a bit of pressure to get.

Something the next month or so, buyer's agents as well. But when it comes to sources, you know, understanding what the fundamentals for the criteria of what you give to them. So the buying criteria give to them is so important because you could just give them, I have a price of 750,000, can you buy me a property? And everyone and their dog can go, yeah, but you know, buying criteria that you have around percentage of renters and you know, infrastructure and opportunity for growth and ripple effect and all of these things come into play and then we move on to slam it. And slam, it's where it's kind of most people go, oh, thank goodness I found the property. But it's the negotiation, it's the inspections, it's making sure that the valuation is done. It's making sure that you've got a pre settlement inspection, even legal looking over your contract, the money in the bank, the bank, you know, contract signed. So all of these things have to happen in that four to six week period. And then the optional extra, maybe supersize it, add some value, renovation, Greta clad, whatever that looks like and then stash it. Which is essentially in my mind is this like putting that property away and going, oh, three to five years is know I can park that up. And you know, as a first home buyer at that price point also you might be eligible for some of the government incentives for first home buyers. So you know, it's important. So there's stamp duty concessions or if you have less than a 20% deposit, there might be chances for mortgage insurance concessions, you know, you might be able to be eligible for the first time loan deposit scheme, you know, the home builder grant, you know, so there's all of these other things when you're setting it up that you can assess as well because you just don't want to sit back at the end and go, oh God, you mean I could have got this as well. So tell me about your research so far. How did you get to where you.

Are and you know the location masterclass which was brilliant, brilliant. It I bought it nearly a year ago but I've been using it throughout the year in just being able to understand what the, you know, a bit of accurate information on the current value of each suburb and just have one reference point for a lot of data. And you know, I did the dot map last year and I also did it last week so it was good to do that as well. Just to get a, an understanding of growth and analyzing where growth is occurring really just getting familiar with the terminology and being used to it. Which is probably your biggest thing I've learned from it is just being familiar and comfortable with all this kind of thing, you know, like capital growth numbers, what they mean in yield.

And for those people who don't know what the dot map is, tell us what was what kind of insight does that give you or confidence in your.

Purchasing owners with the ripple effect potentially how you know, suburbs in the inner suburbs in Melbourne they might have probably lower capital growth but then they're higher in value. But you know they are good suburbs there and you have the middle ring and outer ring suburbs, middle ring are quite safe and they have I suppose is it green and blue generally capital growth figures between 5 and 7 and then the outer suburbs are probably less.

I think what you the ripple effect and the reason that we look at that is almost like if you think of people have to work in the CBD and in Melbourne we really only have one CBD at this stage and it's like well, everyone wants to live close but if you can't afford that you go to the next level area out and if you can't afford that you go to the next area out. And you know, we're recording this in, you know, mid-2020 and you know there's, there's lockdowns and there's pandemics and there's all these things going on. But the fact of the matter is there has been some reduction. We're in a recession. You know, there has been some reduction in the value of the properties. But it's mainly at the high end, the, the middle. You know, ground doesn't drop as much. You know, it doesn't go up as much. It doesn't drop as much as the high end. So you don't have the extreme. So you've got almost an additional built in risk factor there that you are getting into an area that people can't afford this now, so they go to the next area. And so you're almost catching the ripple of the wave as it starts going up. And so that's why the dot map is so good for you, to help you find those suburbs that are just having a bit of pricing pressure on them. So that's right.

Which is what I will probably what we will be doing because we live in Brunswick West. We'll be moving out.

Yeah.

So we will be moving out. So it's about getting the right suburb really that will benefit, you know, that will increase in value.

And it's kind of difficult when you're doing this as a home buyer as well because you've got to, you look at the investment grade suburbs, you look at the ripple effect, you look at the low risk filters that you've got access to in the location masterclass data that comes through the suburb selector software and SQM research every month. And you're looking at that and you're going, but do I really want to live in Dandenong or whatever the suburb is? You know, I work in Sunshine. So, you know, you have to then have a look at the whole list of suburbs and go, okay, in my price range, where have I got the most opportunity to add value and hundreds of thousands of dollars to my net worth over the next, you know, three, five, 10 years. But also I got it. I need to also put this extra kind of filter on, which is I have to also make sure that the kids can go to a good school. And you know, so it is a little bit of an more difficult job that you have.

Yeah, I think so. Because we have to have two hats on and we have to realize we have to compromise as well. So we understand that we have to compromise. We still want to be happy with it, you know, and it will be turned into a rental property. So we're thinking about will the renters be happy as well? So.

So lots of things to consider.

Yeah, yeah.

With the going through like the workbook and the like just the framework of the location Masterclass, you did the ripple effect, you came up with a list of suburbs and that had that pricing pressure. And then the next step is you went through with your purchase price into the suburbs Selector software and you came up with some suburbs. So tell me the suburbs that you come up with.

Right, I have. Sorry, I should have this.

I'm actually going to share my screen and pull up my digital dot map so we can have a look.

Melbourne, Faulkner, Falconer, Glenroy, Hadfield. Are three suburbs.

Okay, so Faulkner, Glenroy, Hadfield. Hadfield. Yep.

We also have Maidstone. Yep. Sunshine West. I don't think we can afford Sunshine.

Okay. Sunshine and Sunshine West.

I don't think we can afford Sunshine.

Yeah, no, that's cool.

And it's Braybrook. Yeah. Brooklyn.

Okay.

There's also Bondora. I just. Is it. You know, when it's 750, do you. @ this stage, you know, the market, do we go up to 760 or do.

We. I'd go up to.

800. You go up to 800. Okay, sorry. So then we can include.

Albion. Mm. So a lot over this western.

Side. Yes.

Yeah. A few up here with the Faulkner and Faulkner, Glenroy.

Hadfield. Yeah. We also had Clayton South, I think. Well, there's a. Clayton has really grown, but I don't want to live. We're happy enough trying to concentrate the northern and western.

Suburbs. Okay, great. And did you. Did you say West Footscray as.

Well? West Footscray is 775. Yes, it will be.

Yeah. Okay. Because this is median price. And until you actually start looking at the suburbs, you might actually find that your pushing suburbs out that you could afford, or as the market comes down, you can. Or you just might, if you're looking for a buyer's agent or you've got a professional negotiator on your side, they might be able to negotiate people down. And there's always some opportunities, you know, death, divorce, all of those kind of terrible things that.

Happen. Yeah. So look, that's. That was a definitely. I didn't really know what to. Should I aim to 800 and then. So say 650 to 800.

Or. Yeah, I'd go 650 to 800. And if we look at the Suburb Selector software, once you've kind of gone into, you know, you've gone through the. First of all, you know, do the ripple effect and get the suburbs. I'd put in here the 750 price point and so that, you know, it's on 750, but I. And, you know, you're happy to go, obviously, 20 below, 150 gram below that. And I just put 10% above. And it sounds like you're about 20Ks out. Close to 15 to.

20. Yeah, we want to be as close as.

Possible. Yeah. And so these suburbs that you've got coming up, you know, going through and, you know, Bundora, all of these. Bundora is probably on the wrong side for you now, isn't.

It, in terms of.

Location?

Yeah. Well, we have to keep it in. I think there's nothing wrong with.

Pandora. No, I mean, from a point of view for working and where you.

Wanted to live, is that probably a bit far.

Out? Okay. All right. But it's.

Still. Still okay?

Yeah. Okay. All right, cool. So, you know, what you would do next is you'd go through, you know, you pull up all of these suburbs that you've just mentioned and then take them all through to the next stage. You've done that and then you've looked at the percentage renters, et cetera. Now, are all these over. What percentage renters have you put in as your.

Criteria? Well, we haven't really. The problem is I probably didn't define my criteria really, because I only got the borrowing capacity.

Yesterday. So you've just looked at what you can afford and you're at that next stage of.

Doing. I'm not at the detailed analysis stage. No. Because we did the dot knot last weekend and then I got the borrowing capacity this week. So this weekend I'll probably do the detailed.

Analysis. Okay, cool. So just know that you know the location masterclass workbook in here and you pull out the section on each suburb that you want to take further. So what I would normally do. So my secret spreadsheet, which has all of those details in it. Let me just pull that up so we can have a look at that. Where did you go? Secret spreadsheet. So I. So I've done this for my mentoring students that I can kind of work out how to do things quickly. And so if I put that 650 to 800, normally what we would also do is do a minimum rental percentage around 30%, because we want to make sure it's around 30. I'm just going to drop it to 28, because I know personally, when I look at suburbs that have got like a 28% rental median, there are areas that are usually a little bit higher. So I'm just kind of, let's put them in and then choose to take them out rather than not be able to assess them. Vacancy rate, I would have it 3%. We know the vacancy rates are going up a bit more at the moment. So if I was in Sydney, I might put this at 4 or 5% once again so that I could take it out. I'm only looking at houses. I'm going to say the annual sales over 50, I would normally say 60, but it's kind of dropped off obviously with March, April and May kind of being low stock on the market. So if I run this, what I do would run this through all of the suburbs in Australia. What I would get in, say Victoria is a list of the suburbs that those filters apply to. So, you know, the Faulkner, the Albion, the Braybrook, these are the ones that you mentioned. So a lot of the ones that you've mentioned are actually coming up on this that fit that profile of having all the right information. And then what I do is I go and run it against my digital dot map and then I come down to a smaller subset of those suburbs. These are the ones that have pricing pressure on them as.

Well.

Okay. When I'm looking the pricing pressure, you know, there's more than a 2% gap between the suburb next to it and it. So I'm kind of looking at that and looking at this and I'm saying, okay, so you know, if I'm looking at where was I? So pull these out. I'm looking at, you know, green here, 5 to 5.9%. So when you were talking about the greens and blues, etcetera, I would normally say try to use like the traffic light colors, but the greens here are pushing onto a 4 here, which is purple. So this is a 1% difference. So when I look at my list of West Foots grade, there's going to be some suburbs in here that have got 1% drew this a 1% difference and there's going to be some suburbs that have a 2% difference. So I've just removed all of the double suburbs. And if I look at here, let me just unhide this. I've got Yarraville is the suburb that has the 2% difference. So I'm always trying to validate in my numbers, you know, that there's a number of suburbs that are within, you know, the two to three suburb range that is putting pricing pressure on it. So we've got suburbs like Kingsville and Seddon and Footscray that have got a 1% difference. And then we've got Yarrabal, it's got a 2% difference. So that gives me pricing pressure on West Footscray.

From. And it's quite evident everyone is, you know, that it's just realistic. Yeah, they're very.

Expensive. You can't spend a million dollars in Yarraville. You know, you can be a couple K's down the road for some 775 and West Footscray. So that's that pricing pressure that we're looking at. So to give you a kind of a criteria, if I was, you know, because I know one of the things that you're looking for is that opportunity to talk to the buyer's agents and say, the buyer's agents, you know, this is my criteria. You don't want to say, I've got 750,000 to spend. You know, I'm looking for a home. I've highlighted these areas, the west and the north of Melbourne. It's going to be convenient for me and my family. I want to be within 20 kilometres. But I'm also looking at making this an investment property in the future. So the suburbs have to have some key characteristics. So my key characteristics are that there is a minimum of 28 to 30% renters. There is a vacancy rate of less 3%. The typical property in the area is a house, not a unit. So they would be like the three minimums. Now they're the kind of filters that we start with in that suburb selector.

Software.

Yeah. Then you know, as you know what we would do next and just pretending that you're doing this all by yourself, you know, let's just take one of these suburbs through. You're going to, you'll be looking at this and getting to know the suburbs. So you're like, okay, so it's a two, two bedroom house in Albion that most people want and the typical age is quite young and it's mum, dad with the kids. So you know, all of a sudden getting an idea of like, well, okay, who is my typical market? And they want to be near the train and you know, there's no real public housing there, so I don't need to worry about looking for it. There's a really good proportion of renters and a low vacancy rate and I'd come over here and go, oh, a good proportion of renters, that's a high proportion. Is there a lot of units? And the answer is yes. So I'd be wary of the fact that, you know, of the 13, 1400 properties that are houses as semis, there's actually 600 units there. So there's a large unit market as well. So just being aware of that now, engaging a buyer's agent is really great because you can just be, you don't have to do all the research you're using. You don't need to do the dot map, you don't need to do the suburbs like the software, you know, but having the, the knowledge of, look, you know, I've actually done a bit of an assessment and this is the criteria because this is the long term plan for this property. So I've come up with a number of suburbs that fit this. But I'm, I'm now. You've now got more information about where you want to be. So when you go and start talking to the buyer's agent, you can actually say to the buyer's agent, tell me what is the relationships that you have with real estate agents in the north or in the west? And if they say, oh, look, you know, I've been buying in Frankston and Dandenong and Yarra Valley for the last 15 years, you're safe with me. You're like, tell me about Faulkner and the relationships you have with the agents. And the agents that are going to call you before they put a property on the market and they're going to go, oh, no, but I'm really good. And so this is one of the problems that I often see with people is that they will get referrals to buyer's agents and they'll go, oh, you know, my mate Frank, he told me at barbecue I should definitely use this buyer's agent. They're fantastic. Or, you know, their articles are in the papers all the time or they're on the radio, whatever it is, and you go to the buyer's agent and they, by virtue of where their expertise is, is where you end up buying. So for instance, it might be a buyer's agent whose whole, whole, you know, repertoire is two bedroom unit or units in Adelaide. And so you're going to go to them and they are going to convince you based on their experience and their knowledge and their relationships and the ease for them to do the job with the agents that they know are going to pass them off units in central Adelaide to sell you a central Adelaide unit. And it's not what's right for you. So being really clear and having gone this far with your assessment, it really allows you then to start being specific with the buyer's agent. So for those people who are doing it by themselves, you've done enough now to start looking in their suburbs that you've come up with with the extra criteria. But for engaging a buyer's agent, you now have the, the idea. So let's just have a look at that short list of suburbs for you so that you've got that. So what I've done here is I've taken within 20ks, I've used all of those criteria that we talked about and I've pulled up these suburbs that have the pricing pressure, ripple effect, and they're between 650 and.

$800,000.

Yeah. So some of the things that I would look at here with a degree of, oh, I might need to be a little bit careful about this is if I double this up so you can see it. So this here, this suburb of Clayton.

South.

Yeah. Has. It's right at the top of your price point.

800,000.

Yeah. And if you have a look at the number of houses and townhouses, there's a large potential for this price to be skewed by the number of townhouses available. So when you start looking for the properties and you start going, wait a second, everything. Every house I'm looking at is 950. It's because the townhouses, maybe 750, are bringing that media down to 800. So I would look at that knowing that it's at the top end and you're waiting for the market to come down and get some deals and discounts. And I would just. I'd just take that out. So I'd go, let's not include. Waste my time on.

That. Yeah.

Yeah. I'd look at these and I'd say, okay, so the average income on these is all quite good. You might look at this and say, look, Springvale is actually on the wrong side of town for you for your commute.

Work. Yeah.

Yeah. Heidelberg Heights. How would.

That. It's okay. I'd leave it in, but yeah.

Yeah. What about.

Karam? Don't even know where that is. I think it's in Eastern. Is.

It? Yeah. So let's have a look at that. Obviously can't spell. Yeah. So it's down on the way to.

Frankston.

Okay. Now that would be hard for you.

To. Too hard.

Yeah. Hard to commute, definitely. Okay, so we'll get rid of that. So you can see, you know, you have had a really. And Heidelberg.

Heights. I'd probably go with Maidstone and Westwood. Scrags. My ones.

Really. Okay, so let's have a look at this. So all of a sudden we've got from your list of what you can afford and a bit of a dot map opportunity down to putting these extra filters on as well and getting real clarity of maybe just three suburbs you need to worry about. And the good news about this is that you Know all of these guys are over this side of town. So you've got a buyer's agent now that you know that you can target when you talk to them about. So tell me about your relationships and the deals you've done and your referrals of other people you've helped in these areas. Yeah, you're starting to really define who you should be employing. Yeah, so this is like, this should give you a degree of comfort. And then you might just look at, I mean here's some numbers here. Public housing, not a big deal. Percentage of rented, all very good young people. We've got once again quite a high proportion there of semis. So I would just be worried that that 750 might be closer to 800. But that's okay. We now know what the typical property is. It's a two bedroom house and three bedroom houses. And we have a look at the growth over the last one, three, five and 10 years. They've got consistent growth, which is good. You know, rental return a little bit higher. Maidstone and West Footscray, which is great. They have had a drop in value in the last year. So it's interesting to see that Maidstone's also had more of a drop than the others. So that might be characteristics of something you'd look for in the long term and characteristic of why it's lower for the 10 year growth overall. So history may repeat or may not. Vacancy rates are all really good. Sold per year, you know, lots of sold per year. This is only 58 in Albion. So this means that it might actually take you a while to find the property. So that's just the only concern I'd have here. Stock on the market over the last three months, percentage change is 5% less. Over the last 12 months, it's actually increased. So you know, over the 12 month now compared to 12 months ago, there's actually a little bit more on the market. So you know, it's interesting to see that medium rent, 373 rental returns, all healthy. So these would be the three suburbs that I would then take to that buyer's agent and say, or start engaging a buyer's agent with and saying, you know, these are the areas that I would start.

Considering. Yeah.

Yeah. And because you've got from a point of view of going, okay, this is a home for now and an investment property for the future, the median price points for all of those are over your 750, but you know, or 1, 7, 4, 5, but it's about looking at the potential in those Suburbs because that is the median. Yeah, yeah. So if we take one of those suburbs, is there any of Albion, Maidstone or West Footscray that you kind.

Of go oh that's I think Maidstone. Well what is Maidstone the Most? It's the WestWest Grey is more expensive than Maidstone just by small amounts. I just think it's probably. I don't think we'll get into there because just looking at real estate the number is they're just not at 700 for houses. So Maidstone is more realistic and.

I think that the thing about that is that you can start thinking about well what is the potential to buy in these areas and what's happening in the market right now. So getting a feel for what the top of the market is, what the middle of the market looks like which is on that price point around 750 and what you know how far down is the bottom 25 percentile. It gives you a real opportunity to start thinking, you know what's, what's this suburb like? So the next thing that I would do in my analysis, paid analysis tool is going to do it quicker but you can obviously use real estate or domain et cetera is I would start looking at the information about the suburbs. So I've just put Maidstone in here, Maidstone Victoria and we know from our information here that it is a three bedroom house that we're looking for. So let's go for the three bedroom houses. There's 4,868 properties in Maidstone and three bedroom houses that we've learnt from sensors. The most typical we've got 900 of those. Let's look at the recent sale history to look at what the properties look like. So busy. Ballarat Road, three bedroom houses. Looking at the size of the blocks here, 790, 690, 675, 560. So this here looks like a townhouse. 650. So there's been a number that have sold that are telling me that 750 not it is possible for you to find something in.

It. Is it is possible.

Yeah. Which is.

Great.

Yeah. We have a look at the. If I then just use the suburb report, you know that you can get from here as well. So I'd be looking at this suburb report on Maidstone to just get a bit of more information. So we're 8.4 KBD. Everyone in Sydney is going what you could buy a house for that much? Only 8.44Ks from the.

CV.

Crazy. So new listings over the last 12 months. 50 currently listed tents, they've got the median value here at 800. So you starting to get different value sets. So SQM research compared to CoreLogic have different data. The number of sold versus the median. So this is giving us the median at the moment in April around the 750. And so this now looks at the median which is the 50% mark is 768. Lower quartile is 675 and upper quartile is 880. So this is kind of giving me a little bit of confidence around the fact that there are properties on the market in that price point for you. It does confirm that the three bedroom price point is the most popular of properties on the market. It's interesting to see that there's recently sold 12 of these two bedrooms. But I imagine if you start looking at them, they're little townhouse.

Development. Yeah, there's a lot of townhouses coming up in Westwoods, Grey and.

Minston. And the thing to notice also is that when we have a look at these data from census, it came from 2016 so there could have been this whole development since then. So it's always worthwhile to look at the basic information. But I would also go to SQM research and they have a lot of free property information and I would put in actually no, I lie, I would put in sold, asking property prices. So the sold records is kind of my workaround to go in and find the typical size block. But if I put in Maidstone here. 3012, check that we've got the right suburb. 3012. Okay. So what I've got here is it's actually telling me they're asking prices that they're saying week in, week out. And these are kind of like live data so saying, you know, that what they're finding at the moment from change from the previous week is a 30% reduction in three bedroom houses. But they're saying three bedroom houses, we're selling for 850. And this is not a quarterly number, it's not a annual number of median over the last 12 months. This is kind of what's happened last last week. So they might only sold two properties. So you have to be a bit more that as well. Yeah, but it's actually kind of, it's interesting to see the, what's happening to the market. So this might be a measure when you're going, when you download that location masterclass book workbook and you're selecting, you know, the three to five suburbs you want to concentrate on and you Were going to map it. You probably start mapping this. Okay. So this is the median price this week, and it was down 30%. So you might start seeing that, you know, my next week it might be down to 780 or something. And it's, you know, it's come down another 20% from the week before. So this is kind of interesting information. If you have a buyer's agent, this is their job. You know, they're out in the. They're talking to their agents, and the agents are out there talking to them and they're saying at the moment, you know, there's a lot of stock coming on the market. I'm talking to people all the.

Time.

Yeah. Some good deals happening. And so they're talking to the agents, and that's where you could actually have someone who starts giving you some extra value in you not having to go and do all this research. You've actually found where you want their expertise to be and then.

You. I think if we, If. I know. I suppose I know my criteria and I have a short list of suburbs that's. And I'm confident about them as well. They're going to be safe.

Options. Yeah, yeah. And I think. I mean just to, you know. Well, you've got access to this.

So. Yeah, I didn't know that one. SKM Research.

Yeah. They've got so much good.

Stuff. So much there. Yeah. With Fawkner, that's the other suburb we're thinking.

Of. Yeah. So I just want to see why it wasn't on our.

List. Yeah.

Okay. Because what we found, obviously, was that when we had a look at the short list, we did have. I've got every state in Australia on.

There. Faulkner is consistently growing, but.

Not. Yeah, so this has been great. And Faulkner has come up over the last six to 12 months on my list many times. So this, you know, 720 price point, you know, median, every. All those. All those criteria that we used, you know, it satisfied all of that. But where it fell down was in this month's data when we had a look at.

Faulkner.

Yeah. You know, we've got this at 6. So it started growing. So it's. Now it's, you know, 7%. So it's had a little bit of extra growth. We've got a 3% here and we've got a 5% here. So what's happened is, when I've been looking at this in previous months, and I might even be able to do this. Let me just think, how can I do this. To October? So if we Go back, you know, eight, nine months and have a look at how Fawkner looked.

Then.

Yeah. What we probably will see is that it had a lot of pricing pressure on it and now that pricing pressure has resulted in growth. So we've got that. Where did you go, little Faulkner up.

Here. You saved this, did you? Yeah.

Yeah. I'm a little paranoid about these things. I like to be able to go back and find.

Information. Yes, yeah.

Yeah. I can't even see why. I don't even have Faulkner on there. Why is Faulkner not on there? But what you will see here. Let me find another one. January, which is always an interesting month. Some suburbs. The data is insignificant for the month. So I take it out because I worry that it's, you know, there's not enough sales for me to justify for people to go spend hundreds of thousands of dollars. So, you know, we've got here, Fawkner Here at 5, we've got Pasco Vale and got Coburg 9 North. So I'm looking here at 5 to 5.9. So all of these are 5 to 5.9. And then we've got the suburbs of Pasco Vale south and Coburg up above it all then pushing on. So we've got these yellows that are above this pushing in. And what's happened when we jump over here is that that's now come to reality. These guys are still the same and we've seen, you know, the growth come off a little bit because of the price in these areas. But we're seeing Faulkner, people are jumping into Faulkner and that is going up in value. So what we would. To what the reason I'd look at. And you know how you said you did a dot map last year, you did one last weekend. It's kind of interesting over. I do. I would normally do maybe every six months, but I've got them every month here. But what you will see is like where you anticipate where to buy is often where you end up, because where they end up going up in value, like, damn it, I got it right and now look at. Everyone's buying there. So we went and had a look more details in Faulkner, you'll see that potentially it sold more properties and then it had this time, you know, if we look at 12 month data, 12 months last. Last year. So we've already kind of predicted it and it's moved. So the area is still good. It means that people are buying there. It just means that you may have missed out on a little bit of the.

Growth.

Yeah. Has the pricing pressure, you know, it's still this side of the ring road. There's still a lot of good things about it that might desire. Keep it on your.

List. It's still, it's still. But it has. I didn't really see that in my dot maps, but I'm not doing them often and frequently. But so it's still a safe.

Bet. But the other area, there's already the growth is starting to happen, the pricing pressure. So one of the things with the rig effect is you're like when people can't afford this, they'll go to the next area. And so you kind of like anticipating the long term growth area. So we try to find the next hotspot. But the reality is if you could afford $1.5 million, why wouldn't you be buying a terrace in Parkville, Carlton or somewhere else that is always have consistent 6 to 7% growth and you don't have to by the virtue of your borrowing capacity, go to the next hotspot. You just buy into one that's always already proven.

Good.

Yeah. So kind of what we've done in the last year is we're going, oh, Faulkner and Reservoir, they're really good areas. The pricing is going to catch up or the pricing pressure is going to catch up and the growth's going to catch up. And it.

Has. Yeah. The reservoir, it's definitely gone. Very expensive. Yeah. So that's kind of nearly. When you say it's the growth has happened, does that mean it's kind of going to stop for a while and then go up again after a few years, is that.

It? Well, that's kind of that $60 million.

Question.

Yeah. The thing is, as the other suburbs like that, Coburg north, et cetera, their pricing goes up there, it will then again push people over into the next level. As you know, incomes go up. So it's one of those things where the ripple effect and the analysis gets you so far. And that's why I kind of like the fact that we have this other short list as well. Let me share my screen again. Technology. We have this other short list as well that has all of these other suburbs on it that, you know, you already kind of came up with and said, you know, these are okay for me. So, you know, these areas are already on your list. We're not going to have Geelong. These guys are a little bit too far out, too far away. Yeah. Yep. So we take these out and I don't know where works. I know. Hi, Burke. These aren't in Your area.

Either. Too far away.

Yeah. So, you know, all of these. These are in your area. And all we're really doing is we're adding in the. The next level of the pricing pressure. But if you got some pricing pressure already has been realized. Reservoir, you know, we've already got in Reservoir, you know, it's already had fantastic growth, 7.79%, you know, and all the suburbs around it have had 7.79%. So, you know, they're all kind of this. We look at the CBD and we're like, wow, there's. They can't afford Brunswick East. They go to Thornbury and they can't afford that. They go to Preston, they can't afford that. They go to Reservoir and they can't afford that. They might be in Faulkner, you know, like, it's kind of. We're watching that growth and then you go, well, next one will be Thomastown. And what a shock and surprise. The next one will be Laylaw. You know, so that's kind of how it.

Happens.

Yeah. But when we get to Melbourne.

It can't last forever either. Like, can't go.

On. Exactly. Then when we get to Melbourne, we also have these funny little mental barriers. Like the ring road. It was like going past the ring road. And that's why it took so long for the pricing pressure to push over into Broad Meadows. Because of that kind of, you know, mental.

Block. Gators.

Yeah. And so we have to. We can use the data as much as possible, but then we look at this as well and, you know, the fact that you've done your research, you can show that you've saved a great deposit over the, you know, three years. Yeah. You know, you've also got the fact that you've got some really Good, you know, 750,000 is a fabulous entry point into the market. You've got the ability to make this investment property decision and you've got the ability to use a buyer's agent to assist you in finding the properties and just bring them to you and do the assessment beforehand. And as long as they're not, you know, to be honest, you could set up a, you know, Albion watch list on domain or real estate or data, and you can get all of that, but you want someone to then look over those with your buying criteria and say, well, of the 10 that came on the market this week, these.

The two I'd consider, they get to be more efficient. And we can. Yeah, it's just more efficient process and probably their negotiation skills and you.

Mean depending on the buyer's agent, you know, budget for between 10 and $20,000 around Australia. That's kind of the.

Number.

Yeah. And a good buyer's agent is a, like a good mortgage broker, going to save you time, do the legwork for you, do the comparisons. As long as you give them the right information of what you want, they're going to be able to find it. So you now have a buying criteria, you now have some suburbs, and now you can sell. All those referrals that I've had for the buyer's agents, these are the ones that I know are in this area. Or ring them up and say the questions are, you know, tell me the areas that you've bought in in the last. Give them six months, because three months is been difficult. Where would you say is your area of expertise? And most buyer's agents say, well, I can talk to any real estate agent and I could buy anywhere in Australia and any suburb and I can do it all. But the reality is that, you know, once a week, for instance, I know in that northern part of Melbourne, once a week, one of the big real estate agents gets all the agents on a bus and they do a run and they go and find. They go and have a look at all the properties that come on the market. So everyone's familiar with.

Them. Who goes on the bus? Sorry, who goes on the.

Bus? The real estate agents from all the different franchise get on the bus and they look at the properties that they have coming on the market. So all of their agents, if someone comes in and says, is there something over in Brunswick East? They can go, oh, yeah, actually, I saw that. I'll put you in touch with the agent over there or have a chat for you. And they look at all the properties that have come on the market for all the other real estate agents that.

Week. Right.

Yeah. And then they get off the bus and they ring the buyer's agent that they're the mates with to say, I've got something coming on. Like, did you want to get through before their open home? Yes, that's what we want.

Yeah. When the next thing around. So the year buying criteria. And we'd look. And part of the reasons why we like these suburbs is we're not too far away from train station, which is great. But the other thing is, the other aspect is renovation potential. How do you look at that? How can that be addressed generally when you're buying a property or is that something you do in the detail, detailed review of each.

Property? Two ways of doing that? I do that by looking at this suburb report to give it a certain indication that says so I would only ever renovate if I could make $2 out of every dollar. And I. Cosmetic renovations traditionally. So I'd look at this and say 760,000. So a 10% cost of that is 76,000. I want to make $2 for every $1. So that's 152 that I need to see that there's capacity in that suburb. So I'd go $152 plus 760. So is the upper level here less than 912? No. So I'd like. Okay. There may not be pricing pressure that allows me to create $2 out of every.

$1.

Yeah. I spend in this area. But what if I bought it 700, like somewhere in between. So if you go at 700, same methodology, 10% renovation cost plus that extra 10. So 840. Yeah, there is capacity. So this would say to me in this suburb there's capacity as long as I could buy around 7 to 720, you.

Know.

Yeah. And so and that. And then you validate that by going into the suburb itself and having a look at the properties that have sold around that, you know, 8, 80 kind of mark. And you look at the ones that are on the market at the moment. So you might look at this one that's on the market now. We're in the same suburb, 650, and it's probably unrenovated. So you get a feel for what the unrenovated is and you get a feel for, you know, what would I have to do to this bathroom? Well, I'd need to put, you know, the floorboards look fine, maybe update the paint. So let's say 4,000 for the paint and then you go, you know, what about the bathroom? Or I could paint that up, paint this, and I could potentially just replace that. But the reality is if I'm trying to aim for a higher end, it's probably like a $10,000 change. And if I look at the kitchen, I'm looking at that. I'm like, oh, I could rent it out, it's all good. But if I was looking for extra equity and not wanting to waste my money, then, you know, I'm only looking at maybe 15 grand there. And so you start looking at that, thinking, okay, so that's kind of a mid range renovation. What are the top end renovated properties that have been renovated? So there's not that many that we can see here. But let's just choose the most expensive one at 790. And mind you, we haven't looked at putting any criteria here around the size of the block. So that might be that. So this one, you know, it looks to me like this has got some kind of development potential or something that they're trying to sell here, sell a bit of.

Land.

So. But that's what I would do. And if I can't find the kind of renovated, higher price ones within the typical six months, I would then go back another six months. So I might go back until June 2019 and try to find what has come on the market. Take this one.

Back. It's just thinking about the tenant that will be in a property that's not great. It's probably not what I.

Want.

Yeah. But that's a few years away.

Yes. We pull up this 860 here and let's, you know, we're in 660 square meters, so we know it's big, more than what we saw earlier. But you know, maybe this is renovated or maybe it's the block size again that sold it. So this is the 660 that people are buying here because it's not renovated. So it gets you the feel for. There's probably reason that I would then go to council and I'd say to council, you know, what size block do I need to do a development on? And they might say minimum size is 550 and everything over 550 square meters you start seeing cells really.

Expensively. So this will be just, you know, not really. It's more a.

Developer. Yeah. And you're in the. You're up against them at that stage. Whereas, you know, look at this, this is, this is adorable. 625 square meters, mum and dad carpet, you know. Oh, they've even got like the old brickies around here, the orange kitchen, the 70s. So, you know, we're seeing. Oh, I don't even know what that is. It's like a sunken palace from Greece. But you know, it's this horribly little.

Extension.

So. So you starting to get a feel here that those higher price points are probably driven by the developers. So I would then start looking into that. But that's how I would look at is there capacity to buy and renovate. So I'd be looking at what's the fixtures and finishes for these 880 properties and the properties I'm buying at 700. Could I, with a $70,000 renovation, get that up to the 880 or is this all driven by the size of the block. Yeah, yeah. But I think, you know, as you know that, that kind of, you know, thinking around. Well, let's, let's look at the super size it and add value and making money out of thin air. I mean, this is magic stuff. Yeah. This is where you get creative. But you have to be in the right suburb to do it. So you have to go through and do that suburb analysis on each of them or outsource it to buying agent and just say, can you. I'd like to think I could renovate, but I need. This is my criteria for renovation. Is there capacity in these suburbs I'm looking at to do.

That? Yeah. And your thoughts on if it's a high public housing number, percentage of public housing? Is that general? No.

No, it depends on. It depends on the city. So in Melbourne, you know, there's public housing in Too Rack Williamstown. Like there's public housing.

Every.

Everywhere. Yeah, everywhere. Whereas in Sydney it's not that much. So, you know, in Melbourne, if I was looking at public housing, it would just be aware of if it's a high percentage, like 10 plus you get in the suburb. I just go and find out where in the suburb they are and just that may be the area that you don't.

Target. Yeah, I think, I mean, that's exactly because the buyer's agent did mention Sunshine to us and you know, she said that she'd only look at certain streets in.

Sunshine.

Yep. Because there's lovely streets in.

Sunshine. Exactly. And Sunshine's got some great areas. I've had clients who've. I was students of the Auckland Gyne renovation and years go by who bought there and done really, really well. Yeah. Renovating and adding value and, you know, there might be opportunities still to do it, but it's just being aware of where you're going to target and being really defined on the.

Areas. An advisor's agent will help you obviously get into the right streets as well.

Yeah. So if you do. And they will know that. And although they'll say, you know, I'd stay away from this area. But if you. One of the things. So these are for people who are watching this that aren't. Who aren't using Wyasagent. So here's some of the areas. So Faulkner is on your list. So see this? This is. Faulkner. Where am I in Faulkner? Okay. So what I did was I went in and had a look at the whole area of.

Fawkner.

Yep. And then I had a look at the census data and said, where are the most renters? With houses. And it was these streets. I went in and created a territory called Fawkner 2. And you can see I've got a Fawkner 1 as well of where the renters.

Are.

Yeah. And then when I click on that Faulkner one, for instance, it will come up with all the properties in that area and I can then go through and say I want to know all the three bedroom houses or whatever it is that you're looking for. But at the moment, you know, in that specific area, if I say the three bedroom house is what I'm after, I know that these, the ones, these four are the ones that I want. And if I did this for all of the properties in the area, I would then go and click on all and say, add it to my watch list. And so whenever any one of these properties came onto the market, I'd be told about.

It.

Okay. Which is kind of like what buyer's agents do for you. Yes, yeah, that would be what they would do. But for people who aren't got a buyer's agent.

Then. So just general tips for me. Just do the details analysis on all the kind of the four.

Suburbs. I think you're at the stage now where you've got a list of suburbs. You can have a look at the other ones on your list and just see why or why not. They may not be on the list that we looked at and you might include some or leave them off. And you would possibly go to the buyer's agent and say, and you know, they usually want two or three suburbs. Say, you know, this is what I'm after. After the typical property, the three bedroom house on the 500 to 700 square meters, you know what you're after and that has capacity to renovate or whatever it is. But you now know the suburbs. So you can start interviewing the buyer's agents on what's your experience in these suburbs. Do you know the real estate agents, what sales have been done in the suburbs? Can I talk to one of your previous happy clients who you bought for in this suburb? Yeah, you know, because if they can't, if they say, yeah, I know the suburb really well, you know, it's different to I've bought here and have done, you know, 10 transactions in the last three.

Years. Yeah, yeah, yeah. Okay.

Good. So you could start interviewing based on the suburbs you've.

Got. Yes.

Yeah. And if you want to add extra suburbs in, you can, you could do that at the same time that.

Extra. Okay, thank you very much, that's been really helpful. Yes, I'M going to do some work this weekend. On.

It. Well, at least we've got you now from I don't know what I can do to a borrowing capacity and some suburbs and, you know, you can start interviewing buyer's agents within a.

Week.

Yes. They'll be working for.

You. Yes.

Yes. And they usually want you to have that pre approval first. So just get that under.

The. Yes, we're getting that. Yeah. Okay. Thank you.

Jen. Okay. Well, I'm glad I could help. And I'm really, I'm really excited to hear about your.

Purchase. Yes. Okay. Thank.