Borrow My Brain Vitali

Welcome back to Borrow My Brain. And in this episode, a really interesting topic.

Two friends who are buying together and.

Combining their borrowing capacity and their know how, but actually buying in separate cities.

That each of them can live in.

So this is a really great strategy. They are actually buying the properties as their homes. It gives them both the diversification across two cities and you know, allows them both to support each other in their research journey as well. So I hope you enjoy today's Borrow My Brain. Hello, it is Jane Slacksmith here and we have a new edition of Borrow My Brain. Now, Vitaly reached out. He and a JV partner are looking at purchasing and they've got a couple of areas in mind. So today I'm going to be talking to Vitaly about his JV and where he's going to buy.

So.

Hi Vitaly and welcome.

Hi Jen.

So tell me a bit about yourself and what the plans are.

So yeah, I'll have to talk about myself and about my friend as well. He wasn't able to make it today unfortunately, but I'll try to cover for him.

Okay.

So yeah, my name is Vitaly and my friend's name is Oleg. We are both engineers. I'm a structural engineer and he's a construction engineer. Been in the field for over 10 years and obviously working closely with a lot of developments and construction and things like that. Yeah. And just recently we thought why don't we just get together, combine our borrowing capacities and maybe try to invest in. We have two cities in mind actually. It's Sydney where I am located and Adelaide where my friend is located. But a few times a year we catch up most of the time in Sydney. Obviously it's kind of a central Australia at the moment. Yeah. But we have good thoughts about Adelaide as well, where we see quite a bit of growth potentially happening in the next few years or actually long term as well. Yeah. So we've done our assessment and we, the, our broker came up with a value that we can borrow up to 1.5 million. So we thought we would split this value into something reasonable, probably about a million 1.1 buy in Sydney as a median price value and to buy probably 4 or 500,000 in Adelaide.

Okay.

So our idea is basically to buy in the area where we don't mind.

Living.

Basically investing for the future, living, upgrading the property, probably adding some value to it if possible in Sydney if there is a chance to subdivide into two separate areas, living areas and maybe potentially rent one area out and live in another area or maybe keeping that area for in laws or potentially if, if Pollock would relocate to Sydney one day, we could live together in the same house and invest elsewhere. We've been friends for a while, so that's the idea for Sydney. And we've looked at the areas like Sutherland, Bonnet Bay, Oyster, Baymere, Karila, Kirawan. And in Adelaide we were looking at the house and that house was in Marino and Hellet Cove. So I guess that's a bit of an introduction of what we want to do. And I guess the idea is for both places that the that condition number one is that we would like to live in those areas while renovating. We don't mind to compromise on the growth a little bit, but being in the places where we would like to be and basically invest in the areas with potential. So where there is growth historically we understand that the growth happening in Sydney. And correct me if I'm wrong, Jane, the growth was on average 7.5, maybe 8% in the past 10 years, while Adelaide may be a bit less, maybe.

3, 4%, about 1%, 1.9%.

So we thought it's kind of a good balance if we invest in both cities and kind of capture the growth in two areas. Potentially in Adelaide we can invest with a mind that we later on, maybe in five, 10 years, we can maybe subdivide and develop the area while here in Sydney just probably upgrading. And as I said, to have two separate living areas.

Great.

So lots of things. So first of all, congratulations in thinking about buying together. And it's a great way to diversify the risk but by having exposure in two different markets. Because a lot of times when I'm speaking to people, they're like, should I invest in one of the proven capital growth capital cities like Sydney and Melbourne or should I have a go at Hobart or Adelaide or Brisbane, which have had less growth. The fact that you come up with a bit of a JV twist strategy, which is, well, we both want to live where we want to live at the moment and why not do the kind of home hopping strategy which is, you know, move into the home, create, you know, the renovation that you really.

Want and potentially then hop to the.

Next home and keep that as an investment property or sell that, no capital gains tax as it is at the moment anyhow, and then use that money for the next property. So the fact that you've almost got like two going at once is kind of clever. And I'm not too sure about which.

You'd probably have to check with your.

Accountant around how they would look at the joint venture of being a home. Like, you know, you can claim a home and sell and not pay capital gains tax within six years. So you might just have to have a chat to them around that so that you're very clear on that before you go into this venture making potentially the assumption that that's possible. And I guess the other thing is that the areas that you're talking about, you know, there are. They are these kind of more lifestyle areas that you may not always look at for growth opportunity. But funnily enough, I've just been working on some analysis for the Shire for one of my private clients and it's come there are some areas that have come up with growth opportunity there. So, you know, I think that that kind of is a really exciting opportunity as well, that you don't have to compromise to live where you want to live and lose the growth. So, you know, we might be able to delight you now just so I'm completely clear on this, the strategy is for, for instance, for you to move into the property in the Shire, do a renovation or development, you know, whatever's possible there. And then is there like a I then move out and rent it out, or is it. What's that look like?

We don't really have a specific way we'll be doing it, but potentially have something in mind that I can be living there, let's say it's Sydney. I will be living there for five, 10 years and have another separate area which I would be potentially renting out. Or if at some stage all ex parents or my parents want to come over, we would be having a separate area where they can live.

Perfect. It's interesting. I recently had a private client who.

Was looking in more of a lifestyle.

Area, away from the CBD, but still public transport, commutable 45 minutes or so. And one of the properties. So I had done an analysis about where to buy. I had engaged a buyer's agent on their behalf and interviewed for one that had experience in the area.

And then the buyer's agent was passing.

The properties through me just to make sure that they met the buying criteria. And this one property came up and.

I was so excited and they ended.

Up purchasing it because there was a separate, like what you're talking about, there's a separate living space. And what I could see with this, I've attended a lot of Australian and overseas webinars on the rise of the.

Remote working and, you know, going back.

To work, but just having a separate space even not to rent to another, but Potentially to have as the home office or you know, the video studio or, you know, whatever that is, or, you know, as growing kids, you know, need to the teenagers have their own space that they can have an area. I think looking at properties that allow you to do that is really clever as well because a, it could be a secondary income like you suggested, but when it comes to a resale value, it could actually be more attractive with.

That, you know, the people who are.

Working maybe four days from home. So I think it's a really clever way to think about it. Well, let's jump in. So I did when you said to me you're looking around the shire and a couple of these areas, I did a little bit of analysis because, you know, to be honest, I just can't help myself sometimes. So what I've done here and what.

I'm going to share is I went.

Into, as you might be aware.

With.

The location masterclass course, I've got the.

Suburb selector software and the suburb selector software. What it does is it allows us to kind of put in a price point. And once we put in the price point, we can then go down and say, okay, bring up all the suburbs within a certain area. So, you know, if you're looking in Sydney and you've got that $1.1 million price point, you're obviously very happy to go below that, maybe only 20% below, but you may not have the capacity to go above or you think you could go above a little bit and negotiate down and you know, you might be 30Ks in CBD. This would then bring up all of those suburbs and so we get an.

Opportunity to start having a look at.

Well, how are those suburbs coming up and how's that information? You know, how can you look at this information and then assess it. So for instance, with Kirawee, so I kind of cheated a little bit having access to the information behind the scenes. And I downloaded this into the spreadsheet and did, you know, put up the information around the areas that we're looking at now. When I look at areas from a point of view of being an investment opportunity, I'm always looking at things like, you know, what are the percentage renters in the area and what's the vacancy rate and you know, even to the extent of the yield, these are not that important to you if you're planning and living in this house for five to 10 years and it mainly being a home opportunity. So where most people are going to be looking at this going, you know, there's only 5% people who have rented in this area are renting this area. Therefore, you know, the risk is too great for me to be there because, you know, obviously there could be quite a high vacancy rate. So if I'm listing my property, no one wants to get in there. So what I did is I pulled out all of the suburbs and I think when you said that you could possibly go up to 1.5, I kind of went a little bit over the top, but pulled them all together. And this kind of is that filtration system that I use when I'm going through what is happening in the area. But what I think is always really important is not to forget the ripple effect and looking at what is possible based on what's in the area. So being the diligent little person that I am, I thought, wouldn't it be easy, wouldn't it be great if I could actually look at this spreadsheet and see, you know, what the kind of price points were. Now I've kind of made these so that, you know, there's really expensive areas, Kangaroo Point, etc. Caring Bar. But then we start getting into, you know, areas that 1.4 million. So the oranges, the yellows come up around 1.3. So we're really kind of looking at that higher price point, Miranda. So the guy, Mia and Miranda, Oyster Bay that you kind of mentioned there, they're coming up around the 12 Mark and Janelli and Kirrawee, et cetera, they're around that 1 million mark. So, you know, we're starting to see from a color point of view where some of these prices are. So if I just move these up to make it really easy for you, you can see that we've got some of these areas that are more expensive and some that are a little less expensive. And as I said, it's really important, I think, to be able to have a look at these areas and go, well, how does that fit into A, what I can afford and B, the long term rentability and opportunities for these? So this kind of gives it a lot. Rather than getting into the data and having a look at the data and getting really bogged down into it, this kind of gives you an opportunity to look at the information and say, well, you know, what does that look like? And where am I actually looking at? Purchasing. So I think this, does this kind of make a little bit more sense of where we would start?

Yeah, yeah, definitely, Jane. So I've done very similar exercise, obviously using your electronic dot map, and I've actually done one More thing, I've actually compared the prices, what they were pre Covid and what they are now.

Excellent, excellent. And how have you found those price movements?

I found that they didn't move too much in that area.

Yeah. And what data source were you using?

I was using your electronic dot map. I've just subscribed to it.

Perfect.

A week ago and you've been uber active.

So if I just turn the dot map on here, this is what you're referring to. Some of sentinel and house prices off.

But looking at, you know, these pinks.

And blues and reds that are pushing in on this green.

So what I'm looking at here is, you know, an area that's got, you know, 6 to 7% growth and actually I'm just going to pull this one over because it might be just a little bit easier. But 6 to 7% growth and then we've got. And I'm going to turn these ones off. Came up with the same thing. Hate it when that happens. We'll make it easier to see and because I think what's really important of what you're talking about there is. It's important to see how Covid has affected the prices. And really what we've seen is that it's a low stock environment. Is that what you found with your analysis?

Exactly. Yes, definitely. And recently, for the past maybe two months, I've been checking the properties there and now and then. And obviously they are not on the market for too long.

Yeah.

And I think they're going quickly. So for instance, one of the private clients that I had early in January, February, in 2020, we were looking around this Kirrawi Gimea area and we were looking at the 1.1 price point and they were just. There was only two or three properties coming on every week and they were being outbid regularly.

And then so when I put that.

On hold, when I just wanted to make sure that everyone was safe to.

Get through Covid, I re engaged the.

Buyer'S agent in September. At the first week she sent me eight properties but they had to go up to a 1.2 price point to get into the market.

So some of the data that we're.

Seeing right on the ground at the moment is the fact that the market has kind of moved that 100 to 150,000.

There are more properties on them than.

Were at the beginning of the year. But as you said, they're going really quickly.

And I think that just around these kind of price points that you're looking at. So you mentioned Oyster Bay. Is that right?

Yep.

Probably the only one here that I don't have. Let's have a look at this. Oyster Bay. So we've got 1.27 million is the median and 8% renters. And where else were you? Gymia.

So just on the weekend I was in Bonnet Bay. Bonnet Bay is right on the left.

Yep.

1.3. Grace Point. Kirawi.

Yep.

And Grace Gania Bay, Karillo.

Where do we have Grace Point?

Let me just have a quick Grace.

Point right on the left under Guinea.

Okay.

Down here.

Yep.

Okay, so that's 1.3. So these price points that we're looking at here, you know, the 1 3, 12 and Bonnet Bay. 13. If you're talking about your limits being around that 11 mark, were you actually seeing properties coming that were being quoted in that price point?

Yes, yes, I've seen a few. For example, there was a house which fits our requirement and it was 105, probably was sold for 1, 111 and it was in Bonnet Bay.

Perfect.

There's been another house being sold for 1.1 just recently.

Yep.

And yeah, so there are. There are some.

Exactly. And you know what's really important about this is that when we look at the median price point, and that's why I often go up to these higher price points, because what you'll find is.

That although, you know, they're quoting 1.3.

It'S really important to know that, you know, that is the median.

So there are, you know, a lot.

Of properties, 50% of the properties that are essentially below that.

Well, not 50%, but, you know, a.

Lot of the properties are below that. If I was going to. So Bonnet Bay is one of the areas that you're interested in, obviously.

Let's just actually let me just highlight these so that I can do a.

Comparison for you and make some commentary against them.

So we've got Bonnet Bay. We've got.

Where else?

Gimea, Kira, Winga.

Como as well. Yeah. Como is just above Bonnet Bay.

Yep.

Sutherland.

Sutherland, yes.

Oyster Bay.

Oyster Bay.

Anything else there?

Guinea Bay. Grace Point.

Okay.

19 and 20.

Grays Point. Yep.

Maybe Warrenara as well. That's 32.

Perfect. War, Anara. Okay. That about it.

And maybe Giannali. It's the very last one.

Yeah.

Okay, so let's just move these out so that we're not going to get confused with them. Okay. So the median long term growth in Sydney has been 6.51%. So a number of things that I would look at here and try to gauge you know, where's the risk? Where's the opportunity? Things that I'd have to research further. I'll go through that. You know, there's things here that you might look at this and say, you know, there's. There's some public housing, you know, things in denali and kirrawee. 6 and 7% is not really going to upset me. But you can use the census tool to go through and have a look at, you know, what streets in those suburbs that might just create some issues. But that in itself doesn't create any concern for me. As I said, the percentage of renters, you know, I would be concerned for any of these in orange and yellows if it wasn't you buying this property to be a home or looking for an opportunity to, you know, create, you know, a designated rental property if you were going to have it as a home and then potentially have that secondary income by, you know, segmenting the property and being able to, you know, rent it out. You just might be mindful of the fact of looking at where the public transport is and, you know, where people might want to live. And there is a, you know, some really great schools around this area. And so I would encourage you to potentially, just as you getting into the suburb analysis, go, okay, so, you know, what's that look like? One of the things that, you know, there's so many suburbs to spend your time and effort on, and I try to be really, you know, quite ruthless in getting rid of suburbs that, you know, potentially going to waste too much of my time. And a lot of that comes down to where there's not a lot of sales. So if I look at Bonnet Bay, Grays Point, Wurranora, you know, they only had 20 sales in the last 12 months. And that would concern me that there's only two to three properties coming up a month. So I would have a look to see if there's properties coming up at the moment and enough to warrant you including them on your kind of watch list. But that would kind of had me thinking, oh, a little bit concerned about that, Jane.

Sorry. In relation to this number, is it also important to understand what's the size of the suburb, so.

Exactly, exactly. And so that's where I would go.

To next, which is actually trying to look at, well, you know, this is such a small suburb, the fact that they've got, you know, only 666 houses.

As a percentage, you can. So you can run this as a percentage and have a look at it. But regardless of whether it's percentage or not, there's still only two properties coming up. So if it was a really large suburb and very well held and there's 20 properties coming up a year compared to a very small suburb and there's a lot of turnover and there's still 20 properties coming up a year, it still means that your time in searching is in a suburb that there's only two or three new properties coming up every month. And if 70% of the market is going to be owner occupiers without the buying criteria and investor mindset that you have, they are emotionally going to buy. So you might be out bid regularly. So although it's important that yes, a percentage of turnover as per the suburb, it's more important in my mind in starting to get rid of suburbs going. Well if I'm kind of looking at, you know, Bonnet Bay and there's only two or three properties on the market at the moment and when I'm watching it, I'm watching those properties, you know, there might be two or three coming on every month and there might be five or six on at any time if there's any a turnover of two or three a month and there's only two or three new ones coming on. You'd hate to put all your time just in that suburb. So just be mindful of these ones that would be a concern. Obviously vacancy rate is fantastic. This 10 year growth.

If you can.

Afford to buy at a price point that is getting you into suburbs that already has proven growth and growth that is more than what Sydney is doing. So we're looking at 7.7, let's say 6, round 6, Guimea, Bonnet Bay, Como, these are already doing great. So you know, these are already suburbs that are kind of proven and if we jumped over here and thought well you know, is the price pressure coming in onto some of those other suburbs that puts them on the list. So for instance, Sutherland would come on here because we've got these pricing pressure coming down here then you know, although it's maybe not quite at that stage, it's got some pricing pressure on it. Whereas if we look at Warrenura, which I still can't pronounce, this hasn't done much, 3% and arguably it's on the same side of this river. So I wouldn't be using these suburbs as looking at pricing pressure. We really kind of have to follow the line. But in theory when people can't afford Sutherland etc. They might come down here. So there is still some pricing pressure. And what's interesting is You've got this roadway here that gives you access from the CBD and then you've got this roadway here. So there can actually be pricing pressure from this direction as well. So I would say that this is actually in that ripple effect area that is having pricing pressure. So that's okay that this in potentially hasn't had the growth in the past, but it does have that pricing pressure to indicate it could have the growth in the future. So if I was going to kind of look at this and go, not a lot of sales, not a lot of growth, that's enough for me to go, you know what, I'm not going to waste my time there. And if I similarly look at Gray's Point, there's statistically not enough information to work out what the growth has been and we haven't got the sales. That's two ding dings. I'm being really malicious to get rid of them. And Bonnets bay, it's had 9.9, it's only got 22 sales. I would keep that on the let's watch this and just see if there's something that comes up. But it's not my go to top three suburbs I'll be spending every weekend looking at. Does that make sense?

Yep, yep, makes sense.

If I was looking at these and I was like, if I wanted to be able to make some money in the future and potentially, you know, this could become a rental area property as well, I'd be really attracted to these kind of suburbs that actually have that kind of rental demand coming through.

But I would be concerned about this.

Suburb being Sutherland that has the two bedroom flat being the typical type of property. So there's, you know, lots and lots of units in the area. So you're really going outside the typical property for that area for it to be something that's a investment opportunity for you. So you're creating a bit of risk. And once again I'd just start looking at the numbers like being ruthless and saying, well, is it actually possible for me to find a property at the 1.1 price point? The top of the one up here is 1.3. It's had fantastic growth. You know, we're looking at four to five properties coming on the market every month. I would keep that on. But just be aware that as soon as the market keeps moving and with the end of 2020 kind of enthusiasm that we're seeing and I don't think we're going to get a downtime in Christmas, then Como might just be, oh, it's not Going to be my go to suburb but it's going to be one I'm going to keep watching because if the great opportunity comes up I've got this great proven growth and I can get it at my price point. That's fantastic. So just looking at these areas and your price point I would be considering that these are probably like the go to start of what you can do and then you know, especially because the number of sales that are there. But just keep in mind what the typical property is. So when you're looking at you know, a property in Guimea and you're thinking wow, they're quoting 1 million and the median is 1.2, make sure that it is, you know, it's not a two bedroom house for instance on a smaller size block.

Yeah.

Understand. Yes.

So. So just looking at this area, does that kind of give you a little bit of clarity how you'd get from all of those suburbs down to just a few that you could spend some time on?

Yes, definitely, definitely. So out of those we've just highlighted probably Warrenara is probably not the best option. That's something I have in my mind and I'll keep it.

Yep.

Probably didn't have too much growth and it will take a bit more time for it to grow until the rest of the areas will be developed I guess.

Yep.

And we'll start getting some pressure. Sutherland is because of the amount of units there and Grace Point is just very small.

Suburb I guess just there's.

Not enough data yet.

Yeah.

And you might just be wasting your time.

Yep. But in terms of long term, if it's a long term investment, would it matter for Grace Point? I'm saying that because it's actually quite close to Gymia Bay and here are we.

Yep. I think from a point of view of.

Looking at this area and saying.

If I had to choose.

Three to five suburbs, where am I going to get the best opportunity to get the outcome that I want in the timeframe that I want, be it purchase within the next three months and be it a five to ten year hold. I would look at this kind of area and consider that although it is small, if you keep it on the watching brief and just keep your alerts so you might have some alerts in domain or real estate set up so when they do come up you are able to go in and have a look then that could work for you. It's just that I wouldn't be highlighting all of my time and effort in there. You might look at this and you might Go, you know what, we're happy to just have that there as a watching brief. And the rest of them, there's nothing wrong with some of these suburbs, but if I look at Guimea Bay and I look at where it is, it's a purple. Yes, it does have Yowie Bay coming down, but it's kind of like the next area that gets pushed down after Gymea. So why wait for seven years for growth where potentially, you know, you've got this area, they could do it in five years because it's closer to that pricing pressure, closer to the freeway, etc.

Yeah. Okay.

Now another thing that I did when I did a little bit of research on this, as you know I'm an advocate of getting other experts and all of their thoughts. I purchased the Terry Riders top five Sydney areas. And so he's come up with these areas that have capacity for growth going forward. And I was delighted to see that the Sutherland Shire is one of those. So this, you know, this is really, I think really interesting in having a look at some of the expenditure and some of the opportunities that are going on in this area. But what I found in particular is that, you know, these guys can continually outperforming the market and almost seem to be Covid safe.

As well.

Yeah, right. So yeah, but there's also this lifestyle fuel. It's a 40 minute public transport to the city. But you feel that you're on the beach and unlike some of those other growth areas like around the Badgery Creek.

Etc, you know, there's, there's not vacant land that can be filled in.

We really have some pressure on this as well. What I found really interesting around this report was these future prospects around what is happening in the Shire and future growth and the unemployment's come down. But check this out, the population by 2036 is expected to grow by another 50,000 people.

So these are all things that are making this more attractive. It's got one of the most beautiful beaches in Sydney, you know, Cronulla Beach. There's all of these expenditures that are going on in the area and improving it, including all of the government expenditure to remove that traffic congestion onto the motorway. So we're getting this, all of this going on as well as where we're getting some infrastructure projects happening as well. So an entertainment center, et cetera. So there's actually a lot of positives that are happening in this area that I think we can't discredit. And if you're happy to live in one of the most beautiful places in the world and spend a bit of money. Then I think those suburbs that we just came up with would be where I'd start concentrating. I'd also speak to the council and, and find out what the requirements are for potential subdivision or developing in the future. And obviously with subdivision, you know, access to the back or battle axe blocks or, you know, corner blocks, et cetera, always make it a little easier. But you should speak to the council first. Now, there's a couple of great tools. There's a company called Archistart AI and they do. They usually work with big developers, but they have a, like a, you know, US kind of developer model. I think it's $97 a month rather than 900amonth for the big developers. But they actually show some of the development works and actually show if townhouses or developments can be done on a particular block and in those council areas. So that's kind of. So check that out. But if you're planning on looking at a property and looking at a property for employment, point of view of the floor plan that allows you to segment it, you might be looking like that elevated property. But what I've seen, and this property that I helped purchase for a private client recently, the entrance is straight off the street, but they actually had gone up at the back and the side, so it was kind of like a main house and then had gone up over, like the garage. So there's some really great floor plans that you can activate as well.

Well, yeah, actually there are a lot of hills in that area. So almost every house is located on, like, slanted area.

So that would be, if you buy.

The property with the floor plan to do that.

But you don't want the hills if you're going to develop. So, you know.

Okay, so I also had a little look at Adelaide as well. So let's just pop over and have a look at Adelaide. Unfortunately, there was no, you know, big report that said, oh my gosh, you found the perfect suburb area.

But, and as I said, you know.

Adelaide, there's a lot of buyer's agents I'm speaking to at the moment who are saying it's Adelaide's time, it's time to grow and to expand. And to be honest, I've been hearing this for years, and every time I hear a buyer's agent say, you know.

It'S time we go and buy an Adelaide, I think. And then I speak to a property.

Professor, Peter Kalizes, and he's obviously from Adelaide, and he's like, Adelaide's a Great place to buy. And I know that he does a lot of purchases there as well.

So I always kind of like don't.

Want to dismiss it. But what I come back to is being a kind of creature of numbers.

I went through after I had Peter.

Talk at one of my mentoring weekends and he was saying, oh, if you went back and did a regression analysis on the census data and looked at what areas had grown, it would give you an indication of where the lower risk areas are for the future. And so I went back and did the last 33 years. But what I wanted to do was where were the best areas in every five year kind of gap and second.

Best and third best. And if we look at this, you know, Sydney, you know, comes up as the best, you know, if you purchase there within 2009 to 2019, you know, third best if you know, 2004 to 2019, etc. Etc. Melbourne consistently comes up. Brisbane only came up once in the 30 years. Adelaide only came up once in the 30 years and Darwin only came up once in the 30 Years, whereas Hobart and Melbourne and then followed by Sydney consistently came up. So the great news is that Olek is buying this property as a home and he has the ability you both as engineers making money out of thin air by renovating creatively and adding to $2 for every $1 you make. That is great. But if someone was listening to this going, hey, we're jumping into Adelaide and we're going to have a look at Merino and this is where we're going, I just say settle. And if you had the money to spend elsewhere, maybe at that 500 price point, you might be considering somewhere that even is the rising regional satellite cities like the Geelongs and Bendigos and Newcastles and Central coast, even Sunshine Coast, Gold coast and Wollongong for that same price point. So with that big disclaimer on the table, let's have a look at these areas. So what I wanted to have a look at here was the areas that would allow you to be able to, you know, make some money in here. So tell us a bit about this Marino area. Do you know much?

So Marino area is actually quite interesting. It has a very beautiful coastline and when we were talking to Oleg, with Oleg, he said he wouldn't mind living there. It obviously has a price pressure coming from Brighton and Sidley. Marino itself is not a cheap suburb and it has a lot of luxury houses. I would say. I think the price changes as soon as you get away from the sea.

From the ocean, from the waterfront.

Yeah. So on one side of this road it would be one type of price. So the million and more. And on the right hand side where you point in the left hand side and on the right hand side I guess it would be way less, probably 500, 600. That's why we're getting median price of 700.

Cool. So let me show you a little bit and I just want to make this really obvious here. This legend is completely different to the legend in Sydney. So when you look at this, and this is what's really important, if you're.

Doing a physical dot map is that.

Have a look at the capital growth figures.

Because often I get people go, I've.

Just done the capital growth for Brisbane and everything's blue.

And they've used. The Sydney kind of legends which go up to if it's between 1 and.

2 or 2 and 3, it's blue for instance. And they're like, everything's blue. It's like, oh, everything's blue because there hasn't been any growth.

So you know, we're getting down.

These blues are minus 2 to minus.

2 and you know, anything over 4.

Is a red, whereas it's over 10% in Sydney and Melbourne.

So just be aware.

The legends differ.

Yeah, definitely, yes.

So that's important. But let's have a look at Merino. So public housing, not an issue.

Percentage rented, not an issue. Because Oleg's going to live there. Once again, you know, small number of properties. But this is characteristic of Adelaide.

Right.

So that's why I put extra suburbs.

In there because Adelaide's suburbs.

And it's really hard sometimes doing the census kind of what streets to buy in the suburbs in Adelaide because there's only like six streets and you're like, what?

That's right, yep.

So we already know that, you know, it might be hard.

For instance, you know, Kingston park at.

600,000, they only sold eight properties in.

The last 12 months. So if you were going to just look in one area or just look.

In one area, I'd be concerned about, you know, just using the one suburb.

So potentially he might just expand this to be a little bit further so that he's looking at some of these.

Other areas as well. And I know, you know, even down.

Here, Christie's beach or Sullivan beach, you.

Know, I know Peter Kalisis has done.

Developments down there and you know, they're all very commutable.

You know, it's all good areas.

But keeping in mind that this is a kind of a tale of two parts that you've just alerted me to, which is one side of the river and the other side of the river. What I want to do is give you an idea about how you would do that analysis.

So let's go to Merino.

How do I spell that?

Marino here. And we know from this information that it's like a three bedroom house. That's the typical type of property. So let's just get this up because what you can do is you can come through and you can actually start pulling down all the information. So let's just say we just want all the house information. So there's only 1056 properties in Merino. So if I look at the sales history, you know, and this should go back, you know, at least 12 months. You know, there's, there's a few that are coming up here, but I might want to go back all the way to say January 2019. So I'm trying to get as much time here as possible. So, you know, almost two years worth of information to get the data. And this is how you can use RP data. You could go in here and then you can say, I want to choose all of these and I'm going to export them. So we're going to export all of.

This data.

Into essentially like an Excel spreadsheet. And I'm sure that you can possibly teach me a whole lot more than I know on Excel. But I'm going to show a few little tricks that I use to try to get the information that I'm after around doing that analysis. Because what you'll find is that you can start pulling up. Let me just pull that up.

Download.

You can start then coming up with the information on it. So you know, these are all the little houses that have sold. We've got the criteria of just houses within that two year period. Have you done any of this type of analysis, Vitaly?

I've done some similar ones. Not to that extent, Jane. I've seen quite a few of your videos and I've tried to copy what you've done. Yes, obviously I've looked at the number of houses, number of units and growth and bits and pieces like that. I had my own spreadsheet with that.

Perfect. So, you know, you might just want to like add in a column here and you're trying to get in price per meter squared, for instance, just get an indication when you see a property how much they're selling for. So it's a sale price by the land price.

And you know that's going to tell us in theory, perfect you know, what the cost is per meter squared. But the other thing that we can start doing, and we might just get rid of some of this data because we don't need that right at the moment.

So all these good stuff.

So what I would often do is I'd go in here and it might be. So when you suggested Merino, for instance, you're saying that there's, you know, the east and the west side of COVID Road. Yeah, that might be this kind of. All the really expensive houses are over here and here's the rest of it. So this is how I would try to work that out. So I might have Cove Road east and I might have Cove Road west. And there might be something else as well, which could be something like, you know, next to the Bunnings or, you know, near the.

Reserve.

Because there was a nice.

I guess an important parameter for houses like that is the sea view.

Sea view, exactly right. So there might also be the fact that there's a C view that's associated with it. So there might be a kind of characteristic that it's got. So what I would do is I.

Would then say area and I would go in and do this data validation.

On a list.

And I would choose this is my list and add an extra couple of spaces just in case there's something I forgot and say, okay, so when I. When you start then looking at this. So we're just going to fill this all in. When you start looking at some of these properties and you're like, oh, okay, so here we are at this property here. Let's just say Marine Parade. You know, there's a view of the sea there. You might come over here and you would put down, you know, it's sea view, for instance. And then you might also come over here and you might have, you know, renovation. So you could have unrenovated, you could have updated. So it was done in the 80s. You could have new, new build or you. And you could have newly renovated. So you've then got these options as well. So you're coming over here and you're looking at these and you're going to say, once again, data validation. We go to the list, we choose our source data might be something else.

We want to add in.

We put that in there and then once again, we just copy that all the way down. And so when you start going in one by one into these properties and you starting to looking at the property, you're going to look at the property and you're going to come up with Is it on the east side of COVID Road? Is it on the west side of COVID Road?

Is it.

You know, has it got ocean views, for instance? You know, what's the street look like? Where is it located? So you're coming up with this information, which is actually giving you some intel into, you know, well, yep, it's. It's definitely on the right side of the road. It's got ocean views.

So.

So what's it look like itself inside, Polished floorboards. Looks like they've put some new carpet in there. The bathroom is dated. I would say they've got a second. Here we go. Olek, is that your property's already been sold for you. Your second kitchen downstairs. Kitchen upstairs. So when I would be looking at that property, I would go up, which one was it called? 7 Allen. Where is Alan 7 Allen. So I would say this one has sea views and this one is. It's been updated, but it's not fancy. And what this is going to allow you to do is when you come through and you have a look at these areas and you've done this amount of research, you can then come up and you can sort of these or, sorry, filter these, Filter these. So you might say, well, I want to have the typical type of property, so I want to make sure that I'm only looking at the four bedrooms and maybe the three bedrooms. And then you might look at this and you say, all right. And I want to make sure that I've got all the areas that are updated, renovated or unrenovated so that I can add some value. Or I want to make sure that the land size is always over 500 square meters, because I want to add whatever it is. And this is then going to give you some intel on what is the price point per square meter on the east side with sea views on the west side. And this is that kind of intelligence.

That you could go through.

And that way. Does that make sense?

Yeah, it does, it does. Basically understanding which property is valuable, more or less.

And when you start then, I mean, and you could get really fancy with this and you can put in potentially.

I think you could potentially upload the street addresses and the sale prices to overlay on here. So you're creating your price pin map as well. When you go through a location masterclass, we talk about the price pin that. And so when you're looking at this suburb and you're going, ah, the median 700,000. Well, now we know that if it's on the east side, it's always 1.1 million, but it's on the west side, it's 550 and it's in your price range. So when they come up on your price range and it might be, they're 500 unrenovated and 580 renovated. So you've actually, before you even walk into the property, you've actually got all this information that it is allowing you to go, okay, so now I actually know what kind of price point I'm after for the different area, the different areas within this suburb.

Does that make sense?

Yeah. Awesome.

And that's going to give you that clarity to go, okay, so I want to be in this area. What is the renovated selling for? What's the unrenovated selling for? What's the sea views going for?

And.

And then you can start then targeting the areas that you're interested in. And if Oleg's kind of also looking for the development opportunities in the future, then he might want to once again speak to the council and say, well, what's the land size or the setbacks or all of those things? And when you get into the contracts, there might be things like.

What do.

You call it, encumbrances that are saying, well, you can't do anything here because the sewer line for the property's next door. So you need to get into that detail later, that granular detail. But at this stage, getting in, starting to look in the suburbs, getting familiar with them, this is going to give you complete clarity on how you can progress.

Awesome. That's fantastic. I think to add to the item you were discussing, sometimes if the property is located on a sort of healed area, slanted, planted area, it could be one price. If it's. If it's on a flat surface, it's completely different because as you mentioned previously, the builders would be looking at it potentially themselves. And the price is completely different. If you have to do civil works, if you have to do some excavation, have to put some retaining walls.

As I said, retaining walls always is below the budget.

Right.

As soon as you put a retaining wall in, it could. I remember having a student in. I used to run community courses in Sydney, in Sydney community college, like 2010.

And this couple had purchased a. Way back then.

It seems madly expensive. It was like $1.2 million property in Maroubra, and they were going to do this structural renovation and sell it for like $2 million. It was fantastic.

And they got in there and realized.

They needed retaining walls, and they cost like $300,000 in retaining walls. And it just made no money for them.

It was just like one of those expenses.

It's like, so shoot everything up and it's buried.

You can't show this retaining wall to anyone.

The value is not going to be impressed. Right?

That's right, yes.

So you're not going to get $2 back for every $1.

But I mean, with you being structural.

Engineer and I like in construction and structural together, you guys can make those assessments by using the skill set that you already have. But it's an interesting point that you bring up regarding the hills and potential development, because a lot of people are looking for that extra twist being can I develop or can I subdivide?

And developers have very deep pockets when.

They know that they can make money.

But when you add in a little bit of angst around hilly areas and. Things that are going to make it.

More expensive for them and you're not necessarily looking for the developments, when you're.

In a suburb and you're finding the developers are always outbidding you, then maybe.

Some of these properties that have those kind of quirks that suit you but.

Don'T suit them are going to allow.

You to get into the market at a, like, it's like, how did I do this? At 1.1, they're all going to 1.3. It's like, well, the developers are pushing the price up.

Yeah. And also those items, as you mentioned, I think in one of your presentations previously, I remember it's, it's targeting, targeting the property for specific buyer. Obviously if the property has like few levels. Right. Maybe it's okay for young people like up to, I don't know, 55, 60 years old, but maybe some older people wouldn't like it.

Right.

Obviously going up and down the stairs and if it's a sloping side, going up and down as well. Not the best scenario and option. So. And probably for people who have kids, maybe it's not necessarily desirable. And I think it all kind of have to be taken into account.

Exactly.

And I think that, you know, the fact that you guys are combining your.

Kind of borrowing capacity and you're utilizing the opportunities to buy in good quality areas with the investor mindset for growth potential, but not then having that restriction of renters and vacancy rates, et cetera, but being able to develop the property and improve the property whilst you're in there, that is fantastic. And as you've seen my conversations previously, the extra step that you need to check on those suburbs is just looking for the pricing disparity between the renovated and the unrenovated properties. Because if you don't have that pricing.

Disparity then you know, there may not.

Be capacity for you to make money.

And if I just look at one of those suburbs. So let's, let's. For instance, you know, I would look at the suburb reports here when you in RP data or you know, whatever you use. But when you're looking at the suburb reports, what they do often is they give you that range of, you know, the top percentile is 75%, the 50 percentile and then the 25 percentile. And I find this is like initially a cheap way of seeing if there's the pricing disparity. The more in depth way is going through here and going renovated, unrenovated and making sure that there's enough money to be made. But if I look at where did that go? My pricing suburb report. If I look at the suburb report for the area, it's this number here that comes up and they say look, here's the houses for Merino for instance, the top of the market is 946. So this is probably what we're seeing, the beach views, et cetera. Mid market 770, lower quartile 680. So if I was going to send a run like a ruler over and say give me some generic kind of is there enough money to make their money there for renovation? I would look at this and I'd say, well, if I start at 770 and the renovation is going to cost me 10% 70,000 and I want to make $2 back for every dollar I spend, 70,000, is there capacity for me to do that? And the normal, the answer would normally be well yeah, there's capacity because you know, as we can see there's like 910 and the upper quartile is 946. But in this suburb it's a little bit different because we know that it's probably the sea views and those east of the COVID Road that are generating this upper quartile. And that's why it'd be important for you to then get into this so that you can say all right, so where are the areas the west of COVID Road that are not updated and do that search and see if there's $2. And then you see these are the unrenovated and these are the renovated ones. And just see the price of disparity there. Because my little cheat of using these suburb reports is kind of cool until you get into suburbs that have those kind of extra dimensions, but that Will give you an opportunity to be able to work out initially. Is there that pricing disparity because you don't want to go and spend $50,000 on a renovation and then go, oh gosh, I only just added $50,000 of value on. So you want to make sure that pricing disparity is there. And the only other reason that you might do that is to create that second living space so you can rent it out so you've got that cash flow. But make it so that it could be the teenagers retreat or the video conferencing room or whatever. So when you do come to sell it, people aren't going to walk in there and go, well, this is not a home, it's two different properties.

Exactly. Yes.

That retrofit can be easier for them.

Yeah, definitely. Agree. Awesome.

Perfect. Well, I hope you know my brain.

Has worked for you today and you've got a bit of information that you can go away with and use.

It definitely has worked for us. Thank you very much for that. Obviously a lot of good insights, fantastic ideas. Something was reinforced for us and something to look further. I guess I might just. If you're okay, I'll just ask a few more questions.

Sure.

If we have time to actually go and look at the properties and do all this research. Is there value in engaging a buyer's agent?

If you have time to look and do the research yourself, then the only in a really fast moving market, one of the things that a buyer's agent can add to the value is that they could probably get a heads up using their relationship with their agents before they actually hit the market.

So that could be in a low supply position.

Some of my mentoring students have also engaged buyer's agents and we've curated the right buyer's agent who's got the experience.

Experience in that area.

But they could potentially be seeing properties that come up beforehand.

But in a really fast moving market.

Like we've seen at the end of 2020, what's happened is that everything is.

Kind of hitting the market at once. And although the buyer's agents might be getting a little bit of a, hey.

Maybe going to turn up and have a look at this property on the weekend, they're really trying to get the.

Vendors the best possible price and a.

Lot of that is going through to.

Auction so that we are seeing more.

And more of that. Having said that, I've used a negotiator for some of my mentoring students who will go in and you can engage in negotiators. You find the property you do the intel and they will then step in using 20 years of real estate advice.

And they will go and find out, using real estate language, you know, what's really happening here.

How many contracts have really been let, how many people have done pest and building inspections?

Why are the agents moving? If I put a one after the.

One, is that going to get me.

The property, or do I have to.

Put a two after the one to get the property? A lot of the time you're actually.

Finding that conversation with an experienced real estate agent, they're getting more of the detail. So normally, if you've got the time.

To do the research, do the inspections.

Get out there and get in the market, and a lot of that is.

Inspections during the week now, too, then you might have the benefit of having a negotiator on your side. If you're finding that everything is selling before auction and is moving so fast, then the buyer's agent could step in.

And really get in and be there.

Every single day, every single hour, looking at properties and doing that for you. And they're fantastic. They'll video the property inspection for you. You know, depending on the buyer's agent, they might also say, look, I've got concerns here with the grouting in the bathroom. You're going to have to do this before you rent it or, you know, before you move in.

So they'll give you a lot of insight.

And they're seeing properties every single day, so they're getting really market intel.

And the other thing is a lot.

Of the data that we're using, you.

Know, last month's data, and, you know.

Within two weeks, the market could move $100,000.

So, you know, that they'd be able.

To tell you, you're not going to get this unless you're going to throw 1.2 at it.

Yeah, makes sense. All right. And is there opportunity to maybe if we do all this data and research on our site and maybe engage you to look at specific property and maybe get your advice with all your experience, for example, specifically in Sydney and then later on in Adelaide as well.

That's usually a service I have with my mortgage company.

So with my mortgage company, I have.

Like a diamond service where you get their location, masterclass, et cetera, and I'll do up to like 5 deal reviews for them.

I don't offer at this stage that.

Kind of like standalone, because I can't see the big picture. But having said that, I do have like an hourly rate. If you came to me and said I need to have this completely reviewed.

And it was kind of like a, you know, I would throw against the wall all of the research and information.

I have and your buying criteria and see if you've missed anything and do some observations. That's something we could talk about.

Okay, awesome. No worries. And we can. We definitely have to do it through Diana, right?

Yeah.

Okay, awesome.

Easy.

That sounds good.

Well, Vitaly, I hope that my insights.

Into both the Adelaide and the Sydney market have helped you and Olakat. And I can't wait to hear what you do. Make sure you keep us up to date in the club.

And I think you've probably got some.

Pretty clever ways that you're using the digital dot map too that I might have to tap into.

Okay, sure. Thank you very much, Jane. It was very, very good. Very good. Thank you very much for your help.