Module 2 Q&A Call - 26-11-2013

Hello, it's Jane Slagsmith here and welcome to Module 2 Suburb Selection. Q and A call for the ultimate guide to renovation. Welcome, John.

Hi, Jo. Hi, everyone.

This week you hopefully completed module 2, the suburb selection and got your first taste of our suburb due diligence system. And some of you may be thinking, oh my God, what a lot of work I have to do. And the truth is that it is a lot of work, but the rewards are well and truly worth it, so stick at it. It does take some time. And just before you think you're the only one, you probably are not the only one who hasn't completed everything that's needed. Look, when you're starting this process, I know it can seem a little daunting, but I really encourage you just to take small chunks at a time and work your way through it really slowly so you understand it and you can repeat it next time. Now, I've taught this system to people in the past and before, before they even started. They're trying to find ways to cherry pick the bits out that they think they actually need and leave out the bits they don't like. They think, I don't need to do it all like this. I'll just do these bits. I can tweak it a bit here and save some time. And I say to them, the thing is, this is like a recipe. If you want it to taste the way it says it will on the box, you kind of got to follow the directions the way they are. If you take out bits, it becomes a bit of an unknown, at least for the first time. And then you can change it, which, John, I think when you attended one of my courses a few years ago, you took this sub absolution exercise and changed it.

No, I did it exactly as you told me to.

Oh, right. Then you changed it afterwards.

No, I should have done it actually. Yeah, I would do it now.

So I know there's a lot that we covered and you may want to tweak it a little bit and that's okay. Just follow through the exercise as it is to start with. Make sure you cover everything up. Maybe you want to add some extra things in. I'm not averse for adding extra things in. I think that's probably one of the things that you did. Added in the unrenovated and renovated pricing differences.

Yeah. Disparity and that kind of thing. Yep.

Now, I know that a lot of people aren't a long way through the education process to effectively tweak things at this stage, and I know that's what your urge is to do. So. So if you're subconsciously or consciously thinking about, you know, this is taking a lot of time, I could probably skip this step. Don't. I really encourage you to go through the exercise now. It's kind of like, you know, I don't know, receiving a bill and you think, oh yeah, I'll pay that. You've got it in your hand, you put it aside and you're thinking, I'll get to that later. It doesn't really feel that important right now because the due date's not here. And then all of a sudden the due date comes by and goes. And you think, oh my God, I'm late. And you really could have paid it when you got it. It's kind of like that with the exercise in the, that if you work through it and deal with it when you can, and when you're at that point in the information, you get it all done. If you kind of leave it for later, well, sometimes it means that it could be avoided or forgotten or just missed out. And that's really important to see.

And that way you haven't got a sneaky feeling in the back of your head when you get into selecting the property. Or am I really in the right suburb? Did I actually do enough work to select the right suburb in the first place?

Yeah, it gets rid of those doubts.

It does, yeah. You can be fully confident.

So look, what I'm getting at here is this is a system, it works, I've proven it. I've got a multi million dollar property portfolio and others have too, using it. So the question really becomes, are you willing to do what it takes to make it work? And the answer should be yes, of course you should, but I know it is a lot of work. So if you get this right, the rest is really just a walk in the park because finding the right suburb that suits your budget. So strategy and criteria which we learn about in module one is really just that important. So before we get straight into questions, just get some quick housekeeping out of the way. Firstly, if you're on your computer and you're experiencing problems hearing or perhaps we can't hear you during the questions, there's an option to call in using the telephone. The telephone number can be found in the sidebar under the audio options drop down menu. You can call that number from a landline or mobile, or if you're like me, you can call it using Skype account. So if you're having any problems, do that. We have found that people who use headphones when we talk to them have had a better quality of sound as well. So if we can't hear you when you put up your hand and asking a question, please just put in the question box your question and we'll get into it. So when you have got a question, all you need to do is raise your hand by pressing the little hand icon in the sidebar menu. It's quite small and hard to see, but it lives directly above the audio tab and is at the very top of the GoToWebinar control panel. So clicking the hand button, that will notify me that you have a question. And when it's your turn, I'll unmute your line. When it does unmute, you'll hear a message that says your line is now unmuted so you know that you're on. So you can go ahead and ask your questions by also writing the question in the question box. Especially if you don't have a microphone or the ability to ask me a question directly. Look, I will give preference to those who have the spoken questions, but we will try to get to all those in the question box as well. It's just kind of easier for me if I hear your question and I can talk it back to you, review it back to you, make sure that I'm on the right track rather than going off on a tangent, which is one of the good things that I do regularly. It also is more engaging for the group to hear us talk about it. Remember, there's no silly questions. I encourage you to ask anything that's causing you trouble because the more you put into it, the more you're going to get back. Now, these Q and A calls go for about an hour to an hour and a half maximum. I just ask for the sake of the group that you limit yourself to one question and perhaps one quick follow up question and that way no one misses out. So also be sure that you make good use of the Facebook group. Ask your questions there as well as they come up. There may be people who are experiencing a bit of a roadblock. There are so many experienced people in the Renovator network who are really generous and extremely supportive with their time. There's some great discussions going on there at the moment. Let me just see if I can grab one of these screens to show you. As you can see, this is the Renovator network. If no one's actually jumped into it as yet, there's some. You know, we've got Karen here who's made another purchase. We've got Suzy, who's found a great map as well, to help out. Tracy started off some introductions, which is fantastic. Nathan's got a question that we're going to cover today. And you know, there's so many things that are going on. Look at this. Cricket and the ultimate guide to Renovation. The things that, the places that we see that people have actually done this.

Course, close to my own heart, that.

One was as long as we're winning, right?

Yeah.

I was offered a tour of the McGlong Room on Friday and I gave it up so I could be here now. What dedication. So here we are, back onto the course. So anyhow, as I said, jump onto the Facebook group, ask some questions. We get on there. We try to get on there daily to answer your questions, but if we're not there, there are so many experienced people, especially our beta testers that have just been fantastic. Okay? So lastly, just remember this is not a tech support call. If you're experiencing any problems with a video that won't download or anything else, I'm not the right person to ask because really, I just can't fix it. If you do experience a technical issue, simply email my team@supportourpropertysuccess.com and we'll get someone as quick as possible, humanly possible onto fixing that for you. So look, let's get into this. This week you have been through module two, the suburb selection system that has been the found of my property investing success and I hope to hear about it becoming the foundation for your success as well over the following months. Now, this module was designed to enable you to identify the suburbs within your price range and then how to systematically narrow down that list of suburbs to a short list of three to five with the best renovation material matching your buying criteria that we established in module one. So it sounds easy when I say it like that, right? But it was a lot of work. It is really, really worth it. It's all about you finding your own hotspot, right? So some of the things that I also covered in module one and I know it was a big module. Module two. Sorry. God, so excited. I got confused. The banks and lending criteria Using a mortgage broker and how to get them to do work for you and use their experience in finding out what you need to know about your purchase. Establishing the suburbs within your price range Researching historical capital growth in your chosen suburb and its surrounding suburbs. The ripple effect Identifying the drivers of future hot spots why we buy around the median the research using the data from the property magazines and what information is there and how to use it. Pricing disparity between unrenovated and renovated houses. And this is the key to renovation when we're trying to make a profit from renovating. We've got a really great question coming up a bit later on that someone sent a question in who can't make it today? Where to find out about infrastructure plans and improvements, predicted future capital growths for the suburbs, rental demands, rental yields, population demands, and researching the demographics. Now, I touched briefly on researching the demographics. I'm really excited about this week's module, actually, Module three. You're nodding away. Very, very exciting. I think it's one of my favorites.

It is. Well, I'd never. I had no idea how to get to this information before I did your course a couple of years ago. So you're the queen of demographics, there's.

No doubt about that. Well, wait till you see the tutorial on how to use the census website. It did take me 3 months, 19 emails to convince them to let me find how to get you this data. And I got to tell you, I'm loving it.

It's very, very good.

Module 2 is where we are at the moment anyhow. So let's get down to. In the end, everything we got to in module two is really coming down to those three to five suburbs. And module three gets you a whole lot more resources on how to actually find all the information you need on those. So I know unless you have superpowers that you won't have completed the exercise on suburb selection in module two. And that is okay because it does take a lot of time. In actual fact, sometimes it takes a lot of time just to source the math and the dots. Look, it's really important you do it right.

It really is. Weeks.

It is. And as you go through and do that dot map and do the suburb selection and proceed through the modules as well, you will get more and more content and resources that will help you build that up. So look, today we are going to dive straight into questions. I hope someone's put their hand up. Oh, not yet. And we'll jump in and answer any questions. Oh, we can take Nathan so we can jump straight in. So has everyone found that little hand icon? If not, just type in for me your question. While we're waiting, we'll get on to Nathan's question. So what was Nathan's question? John?

Nathan Scott. I'm working through module two. I'm a little confused about how to decide which capital city to buy in Sydney, Melbourne, Brisbane, Etcetera Module says use apm, Residex, RP data, other material and what the experts say understand the concept of suburb selection, but not so much city selection. Can you help please?

Yeah, that's a really good question, Nathan, because you know, over 12,000 suburbs in Australia, suburbs and towns, it's really hard to start working out the criteria of which states and if you're willing to look in other states and not do the legwork yourself on the ground or take some time off and go and do the legwork yourself that is required to do the actual analysis. When we get to that in module four, I think the thing is that one of the key criteria really, to be honest, is that are you going to be comfortable with doing the purchase near where you are so you have a bit more hands on or doing it remotely. So that really I think comes down to be the first criteria of what we do. The second thing is looking at the market and looking at what is happening Now I'm going to just jump to my toolbox here. Yourpropertysuccess.com your property success toolbox. This is just a little toolbox that I put out every month and I basically cover all the magazines and share some reports and different information and one of the reports that I share regularly is the Heron Todd White report. Now Heron Todd White is actually a valuer and their reports are fantastic. And one of the reasons that I love their reports so much, I'm not sure you can see here, it's like 73 pages long, is that they've actually got valuers out every single month and they're looking at properties and they're looking at thousands of properties every month and they got a really good handle of what's happening in the market. So as you could have seen there in my little map, I've got a little map here of Australia that tells us what's happening, where's the rising market, where's the declining market, etc. That map comes from the information that I have in the Heron Todd White report. So if I jump all the way down here to right at the end month in review now I know that you can't probably see that really easily. I'm going to try to make it just a little bit bigger so you can. But what I've got here is basically what's happening across those markets. So Nathan, your question is what's happening and where is the business end of what's happening in the marketplace? This gives a really quick little idea of what is happening where. So as you can see Sydney is a rising market, so I don't think anyone missed that. Interesting. Melbourne's rising market. So this red entry means that it's different from last month. And Brisbane's a rising market, Adelaide's a bottom of the market. I was speaking to some economists last week, Westpac economists, and talking about what's happening in the market. And I had seen someone, one of the bank economists, say that everyone keeps asking him about Adelaide and he says there's no drivers to actually pull Adelaide out other than the fact that the rest of the country moves in market. But there's no actual economic drivers, especially with the changes in the mining that we've had come off as well, and the dependence on Olympic Dam and some of those big things. So that's interesting. Perth, a rising market. So this is a downgrade from the previous month. Started recovery in Hobart. I think we're probably going to see a little bit more of that around the first home buyers with that $30,000 first home buyers grant that's just been announced there, which once again, talking to economists thinks pretty stupid. And Darwin's a rising market. And Darwin's an interesting market in itself. And Canberra, interestingly enough, a declining market. So this is an overall about the actual states we can actually get with Heron Todd White, we can actually get down to other information as well. So as you can see here, we can see. What do we see? We've got capital cities, units, retail. So this is the New South Wales market. So this is regional areas for those who are looking in regional areas. This has really got some really good information here for you as well. Obviously it gives you some ideas about vacancies and the rental situation, construction, volumes of sales as well. So you can really look through that as a start. If you're really trying to narrow down where you want to buy and what you want to do, I'd suggest that you consider looking at the first of all, if you're comfortable in doing this yourself or if you want to actually do it remotely. And if you're doing it remotely, that's fine. Just be aware that there's a little bit extra work often that's associated in doing that and getting involved. But Nathan, your question is valid. With 12,000 suburbs out there, it's often really difficult to decide where to start. First and foremost, come down to where you're comfortable in actually buying. We're still making sure that you understand your borrowing capacity as a function of the purchase price and then working out also, where is the market rising? Where is there Opportunities to be had. Because we talked about a bit of the hot spot. And one of the things that the dot map shows you is the 10 year growth and allows you to see and anticipate where the growth will be in the future. So it's a good idea that if you're reading that Brisbane is a rising market, then there's going to be suburbs in there that are moving faster. And usually what we see, historically what we see is the inner suburb. 5-10km move from the CBD moves the first and then the middle ring and then the outer ring lags. So yeah, there we go.

And how you're going to manage the renovation is the last one there. So you're obviously going to need a project manager if you're interstate, which is what we discussed on the last Q and A call too, how you manage your renovation remotely.

Okay, Peter, we have a question from you. I've got your hand up, I'm going to unmute you. Hello, Peter, you've got a question. Hello Peter, we hear you typing. Have you got a question? I don't have a microphone. Okay, here you go. What's the question?

How do you set your actual criteria in terms of growth rates, rental yields, etc.

Okay, so back to module one. Pete's wanting to know about how you set your criteria before you get into the module two exercise. So basically similar to what we went through last week, it's really important that you understand what your criteria is. Your first and foremost criteria is going to be your borrowing capacity, so what you can actually afford. And then we're going to be looking at your goal. So you've set a goal that we went through around what your passive income was to be in what time frame. So, so a function of getting to that passive income and understanding what assets you need available at that period of time, maybe 10 or 15 years in the future is going to come back to as we looked at the rule of 72 and the capital growth. So you determine your capital growth and the properties that you need to achieve that passive income in the period of time that you selected will get you back to the growth characteristics you need. So now you've got a purchase price based on your borrowing capacity. You've got a growth. You then have a look at rental yields. Now rental yields, the difference is essentially going to be what assists you in building your portfolio. So the lower the rental yield, the more you have to put into your pocket to cover the cost. The higher the rental yield, the less obviously. So we're in a really unique position at the moment. We have low vacancies across most of the capital cities where they consider 3% to be the equilibrium of as many people looking for properties or as many properties on the market. And most states are well, most capital cities are well and below that 3% at the moment. So we have rental demand which usually drives up rental prices. We also have, I guess a situation where we have a lot less properties have been built from a construction point of view over the last 10 years that would normally be required. Now there is some areas that have had a surge in building and I think Melbourne CBD is one of them. But overall when we look at construction requirements and population requirements, we're definitely lagging across Australia. From a rental yield point of view, the rental yield is going to help you build your portfolio and allow you to keep cash in your pocket so you can buy the next property. So that's where rental yields come into it and I think that's what our growth rate, so we talked about those, your buying criteria. So that's where you start with and that's then what you then go ahead and put across the top of that suburb selection exercise. So just help you to remember what it is. Purchase price might be $300,000, rental yield 4% capital growth more than 6%. So that's where you actually put those numbers. So great question. Thank you. Anna, have we got any hands up yet? No. All right, I'm going to see Anna, if we can have a chat to you. Anna, can you hear me? Have you got a microphone? Yes, but no microphone. We're going to have to get people good microphones, aren't we?

Yeah, we'll send them to them.

So Anna, you've got a question, any.

Guidance or general advice you can give for using the suburb selection process to assess smaller regional centres rather than capital cities?

Oh, and a follow up question. Oh no, same question, eg, Newcastle, Tamworth rather than capital cities. You just saw that Heron Todd White report that I showed from the toolbox. That report goes into regional centres and the thing is anyone who's bought in a regional centre, and I know that when I do Residex for clients I find that if I'm looking at 10 worth for instance or Dubbo or where else are people buying? Newcastle, they're postcodes, basically driven and so you might have East Dubbo, West Dubbo, North Dubbo, South Dubbo, and they're definitely different markets and there's different demographics. It's really important to get onto the council website and what I would do going into regional areas. And I'm all for diversification in regional areas for some yield as long as there's some growth that's underlying that. I know that I spoke to a buyer's agent recently about Newcastle and they've really pinpointed Newcastle as an opportunity. But out of the 30 or so suburbs in Newcastle, they'll only look at buying for five clients in those suburbs. Sorry, in five suburbs out of the whole 30 that are out there. So it is important that you can apply this due diligence as if they're suburbs basically. So Newcastle obviously is broken into suburbs, places like Singleton. You're Singleton Heights and you have different areas of Singleton. As I said, Dubbo, Mudgy, there is definitely different areas. And those different areas you'll easily be able to identify if a smaller regional town that you're looking at is broken into areas by grabbing, jumping onto domain or realestate.com and they'll say, you know, Ballarat City, or they'll say, you know, what's that? Bendigo, Albury. I mean all of those larger regional areas with diverse population, diverse economies that I've done Residex reports for clients have definitely had been broken up into different areas. So. Yep, I hope that answers your question. But you would just apply the exact same information and you know, to give you an idea, I've spoken to people in the recent weeks who have followed a lot of the steps that I've shown in my book youk Property Success Through Renovation. And they're in New Zealand and they've used this process in regional towns. So you don't have to think that this is all about capital cities. And I think as you'll see in future modules, we definitely point that out. So great question. Thanks, Anna. I hope I answered that for you.

Christine hasn't got a mic either, but she says I have a buyer's advocate looking around Newcastle and to date the properties he has found require more renovation that I would have the confidence of taking on the first time around. Also our price range is around 350,000. The result is we are getting obviously not in the suburb that has experienced good growth. Just wondering if in fact we should be looking in other areas other than Newcastle. I'm aware that the Hunter has good pockets, but areas such as Cessnock and Maitland have higher vacancy rates due to a mining slowdown.

Okay, no problem. Okay, Christine, good question. I guess I'm always very concerned that I'm going to give people direction about where to buy without teaching the steps and process. So I'm going to take on board that Newcastle is the right area for you and I understand that you're looking at Cessnock and Hunter Valley as well. I guess a couple of things that you say there are really pertinent to the exercise, suburb selection exercise that you've been through and in particular the dot map. Because I think unless you go through the dot map exercise, you're going through the concerns that you will go through, which is, oh my gosh, the suburbs that we're looking at haven't taken off, but the suburbs around. There are other suburbs that have really good growth in your council at 350. Are we really getting a dog that will never go anywhere? And that's really the basis of this question, isn't it?

Yeah, you kind of got to almost wipe the slate and start from the start, really, because otherwise you can kind of. Yeah.

One of the good things about not being familiar with Newcastle is that you don't have that preconceived ideas. I know when I moved to Melbourne, first of all, I looked around where to buy back in 1998 and I thought that Williamstown was fantastic and three real estate agents refused to take me to rental properties because they said it wasn't a good area for a nice girl. I mean, the property is there over a million bucks. Same thing when I was in Sydney. What about Newtown? Everyone said it was really dirty and dingy areas that you might be picking up now. And they were just based on me doing the equivalent of the dot map, looking at areas that I felt had reason to grow. So I think if you get involved in that dot map exercise in particular in Newcastle, haven't you had someone from the beta testers to Newcastle as a dot map exercise?

I don't think so yet, no.

Most cities undergo it. But I guess my answer to you would be I think Newcastle has a lot of fundamentals and a lot of different economies working for it. And I think the concerns that you picked up about the Hunter Pockets, Maitland and Cessnock in particular, I can personally comment on without divulging any information from privacy. I'm working with a number of clients there that are working with buyers, agents that are looking at the Greeny Flat type construction. And I've had a few valuations that came back in late 2013 that were of concern and some of the concerns they highlighted was that Raymond Terrace Bypass that had a lot of guys and girls working there on the road construction is now completed so vacancy rates have got higher. Obviously there's also A slowdown with mining. I've got a client who's part of a large service provider to the mining industry and they've had to let quite a few people in excess of 100 people go because the mines aren't using the services that they or products that they have. So there are some concerns there. It's not just mining the road and I know that there's a number of people looking at granny flat works there and I've worked very closely with a great buyer's agent for clients who is doing that. You just have to be aware. I've done financing for granny flats for clients in some of those western Sydney areas. And if you're buying a 4, $500,000 property and putting $100,000 granny flat on the back and renovating the house at the front, it's a doable kind of conceivable thing. But if you're buying a $200,000 property and putting $100,000 granny flat on the back, three bedroom house at the front and 60 meter square, usually one bedroom unit at the back, that's half the value in construction cost for the entire block. There are some valuation issues that are coming up, so just be aware of that. If that kind of the twist on the renovation strategy that you're looking for is in those areas, it's very, very hard to get comparable sales and finance, obviously because there's no comparable sales. But Christine, I hope that is answering your question in the sense that I think the DOT Mac is going to give you the clarity and then you'll be able to share those areas that you think that you want to target with your buyer's agent. I've got a client working in Brisbane at the moment who exactly through this exercise and they gave the information to the buyer's agent who confirmed through their own work and research that the areas that they'd selected were the areas that were the ones that are up and moving.

The other thing is Keith in the Facebook group. He's about to start a project in Cessna Keith Mewes. So he's really generous with his info. So maybe just pop him a message on the Facebook group page.

During the beta testing he was actually going through negotiations, wasn't he? Yeah, he was using the checklist that you guys will get later for assessing a property with where he's going to make money. So he was keeping the address quiet until he got the property and now he's all go, which is great. Christine, did that answer your question properly? I'll just get you to Type in yes or no and we'll get on to the next question.

Should we take Rosalind's?

Okay, so Rosalind's got a question for us.

Okay, so Rosalind says in module one, you talk about the strategy restructure with a twist. And you mentioned the suburb needs to have a big enough differential. Your example, $450,000 for a two bedroom to $600,000 for a three bedroom. So $150,000 jump or disparity. So my question is, what is the minimum differential amount that you feel is needed for this strategy to be viable and is there a formula to work out this amount? The suburb I have in mind is only a $65,000 differential between a two bed and a three bedroom.

And the two bedroom is 418 for.

The two bedroom and 483 for the three bedroom. I'm concerned that this differential is not enough, as is less than half of your example amount.

Yeah, Ros, great question, because I think you've really hit the nail on the head there. My gut feel on this with a couple of quick little calculations would be if the Median price is $418,000 for a two bedroom and you're looking at doing some type of structural renovation to make a three bedroom, you're going to be spending some money and I'm assuming the property needs extra work. So if we look at that rejuvenation type renovation, we're talking about a 10% spend, so we're spending 40 grand, adding it. Even if you can get that property maybe 10% off, you still with buying costs, there's very, very little increment there for you to make a profit. And if you're going to have to sell it afterwards. So if you're doing a renovation to sell strategy, the selling costs and capital gains tax would mean that you'd be one of those many people who fall into the flippings easy and it would be too expensive. If you're looking at the refresh kind of renovation strategy, that is you're about to work, walk into a property that just needed a really good clean and maybe spend 2 to 3% of the value of the property. So less than 10 grand, you can get in there and add a wall and do a quick clean up. There might be money for you to be made. So it really comes down to what the property needs. Remember what the renovation budget is, what your costs are for purchasing that property and what you can get it for. And that should work out your buy price. And, and once you've got the buy price. If you're looking at the subsequent revaluation price not being a lot more than that, then you're not really going to make a lot of money.

A really good tool is suburbview.com and under the reports tab, I believe it's in the exercise there's a little tab called. Or an option called three month rental yield. And actually within that it's got medians per bedroom. So that's a really good way of. You can stick those in your spreadsheet. It's a really good way of working out comparing one suburb to the other to see what kind of difference they have between the difference in price between a two bedroom and a three bedroom or a three bedroom and a four bedroom. And it's not a bad indicator of pricing disparity too. I often use it just between three and four bedroom houses.

Property reports.

Property reports. Might have to put in a postcode first. Yet. 3 months rental yield on the right hand side. Yep.

So you can see here, this is just. There's so many reports here, the rental yields, rent reports and when they can break it down through bedroom, I think it's really, really handy. So you know you've got here the.

Median price per bedroom there is a good one.

1, 2, 3, 4, 5, 6. Remember, this is data that they've scraped from their resources and then. Well, I know it was real estate and domain, but I think now it's more the major agencies and househound and some of the others. So you can see here, you know what the. What the 1, 2, 3 bedroom differential is as well.

And there's actually a spot to put that in the spreadsheet where she was looking.

Did she? No, no. Now, John, I don't think we have another question here. I'm going to ask you a question. Are you ready for it? Just picking up on what Ros had said and that was that she was talking about differentials and renovated and unrenovated. And I know when you first did my course and you took that property selection spreadsheet and you went away and you did all the numbers and you came back and you highlighted an area and you shared with what you'd added onto it. So you'd actually gone through the suburb that you selected and you also had put in prices for unrenovated, aged, renovation and renovated properties per square metre.

Yeah, and that's going to come up in the next module as part of. So I just try and become the expert in the suburbs that I'm looking in at the moment. There's a couple of suburbs in the eastern suburbs, which we're just pounding the pavement every day. Yeah. Of Melbourne. Sorry. And one of the things I do is I go through all the opens and we are skipping forward a little bit here because this is in module three, but I go through and I record the state of every house on the market, essentially, regardless of whether it's a contender for me to buy or at the resale level. And I record the condition of the house just quickly and I'll be in and out within 10 minutes. But I'm just recording the condition of the house, whether it's unrenovated, so pre 70s, or whether it's just dated. Maybe it's been renovated even in the 80s, but it's just not too everyone's taste. Most people would want to renovate it to move in there, or it's been renovated and I class that as in the last 10, 15 years. And then when it sells, I go back and I pull up that sheet and I file them all away. And I tend to be pretty anal with the filing. I file them per bedroom, whether it's dated, unrenovated or renovated. And if a suburb's got different parts to it, because some suburbs can be really, really different. For instance, there's a suburb here in Kew which has got three, four kind of distinct pockets and there's about a million dollars between the top pocket and the bottom pocket, just in the kind of median.

So if you were just looking at the suburb itself, you could go, wow, there's a million dollar differential I'm in.

And it reads that way on the Residex Top 100 report too. So that's another thing to watch out for in the top 100 reports that if you've got a really large suburb and there's really a big difference between the top end of town and the bottom end of town, than, yeah, it can give you a bit of a bum steer that way. So you still got to go. You can't take the report at face value. You've still got to go away and do a bit of groundwork to work out what's going on there. But yes. So when the property sells, I'll pull my inspection brochure back out and I'll just add in what the sold price was, whether it was renovated, unrenovated or dated, so what that price was, and then what it sold for per square metre. So I started to get an idea of what unrenovated properties are selling per square metre and. And what Renovated properties are selling per square metre and often what you'll find, particularly a few years ago when renovation was the.

The first block, when they had the first block on tv, everyone went mad but unrenovated and the renovators dropped.

It's true. Yeah. If you put renovators to light on, you had these hordes of people outside, which is. And what I found when I started doing this probably four years ago is that often the dated properties and the unrenovated properties, they track about the same. They track about as in median per bedroom and also price per square metre. So yeah, it's that old thing and we kind of half wanted it a bit coming up in the future modules. But you can't assume just because it's unrenovated that there's capacity to add value. It's never down to that at all. It's always the numbers.

So that suburb that you mentioned about disparity across bedrooms, to answer Ros's question, that suburb view.com is one of the resources we'll have in module three. We talked about propertyreporter.com in this module in the exercise video, the people who go to that had extra information breakdown through bedrooms and one of the other ones that I'll share with you. Module three is also the. Basically the bond collectors for each state go through and they have some really great reports and other good government.

And I also think these guys have now got that too. Suburb.

Well, I know that they're pretty good. They've been really trying to work their way up and getting some really quality data and since they're, you know, kind of gathering this now, they've got the time under the sleeves to have the data available.

So Suburb Reporter has a quartile measurement that they do they. Property Reporter. Yeah, Property Reporter. And they split the market into a lower quartile and a. Yeah, I can't remember the terminology now, but it's a similar kind of thing. So it's another good tool. There's very few tools that you can use for disparity. When we get into module three and we do the pin map, so once you're down to an individual suburb, you can't go around doing it to 10 suburbs because it takes a fair amount of time to do. But that's probably the most solid, concrete way to look at exactly where the pricing disparity is. So you actually have a colored pin for each price range and you go and stick it in the map.

Don't give it away. They've still got the dot map to do.

But other than that, there's the Residex report, the top 100 report, and then they do the schedule for renovating. And what that's telling you is the spread of values on the street. So the bottom of that might be a house at 400,000 and the top might be at 900,000. And it ranks all the suburbs in a metropolitan area over which suburb has the most amount of streets with that spread of values.

I purchased one of those renovate estate reports and also one for a suburb. So I might do a little quick look at that next Q and A and show people what they look like because there's one of the few resources that we recommend that you actually have to buy. Okay, let's move on to our next question. Wing has a question for us. Should you buy in a rising market or the bottom of the market to get the maximum growth? Wing? Great question. I guess I probably confused everyone by talking about Heron Todd White's report and how to find the market and what's happening. The way I've seen many economists answer these questions and some of the valuers who do presentations is they sit back and they kind of shove this question aside by saying Australia's made up of so many markets where one is rising, the other one is falling. So there is no general rising market in Brisbane, Sydney and Melbourne on Hobart, as we saw in the report. But what there is is a lot of sub markets and you know, to give them the due. These guys spend a lot of time doing this research and they're right. There is some sub markets. I bought in rising markets and you know, I do not regret that decision came down to putting the Trident strategy in place, which is getting intimate with a suburb. And I used the equivalent of that dot map to find the suburb and the trickle effect and find the next hotspot so that I can anticipate the growth, which is one of the prongs of the Trident strategy. I found properties that people didn't want or had access issues or had want because they felt they were unclean or dirty or they had disinterested sellers and I was able to get a price below the market value. I then renovated it. To be honest, what's happening in the rising market and bottom of the market, etc. Unless there's a complete blowout and there's a top of the market and people cannot afford to buy or rent in that market, which we really haven't seen before, I think that there is really an opportunity for you to use this dot Map and then the pin map exercise for the next module and really get down to determining the right suburb that suits you. Because the suburbs that I'm looking at, definitely the suburbs that John's looking at, you're looking at properties over a million dollars with a buy to sell strategy. They're not the suburbs that I'm looking at. It's, it's difficult to often talk to people and find out where they're buying and then get confused with it. If you've got the knowledge and the confidence behind your decision, which you're going to get with that dot map, and I know it's work, but you're going to get with the dot map and then get with the pricing, sorry, the suburb selection spreadsheet, you're going to really be able to hone down the basis for your decision and you can answer people and I often speak to people about why they board in areas and they say, because I know the area. And I simply say, what's the capital growth prediction? What's the population growth prediction for the area? What infrastructure changes are happening? What's the median price point? What's the median demographic, what's the median type of house look like? And they can't answer those questions. You will specifically know the answer to those questions by the time you finish this module.

3. One of our testers, Kim, went through and did the complete exercise in the beta testing stage. I just had a good chat with her yesterday and she found that it was easier and it was written in the exercises, but she found it easier to start off with the dot map and then go back to the spreadsheet after that. And part of that was you can see the surrounding suburbs around the dots and you can kind of have a narrow a few of your candidates first before you go entering all that data into the spreadsheet, which can be pretty mind numbing. Doing all the data entry, it's lovely when you get to the end and you can compare it by columns and select the it by columns and go, oh, which one's the best one? That's the pleasurable bit. But entering in all that data, if you can do anything to cut that back a bit. So we might even look at changing the order of that around as we go on. I mean you still got to do it, you still got to do all that, put all that data in. But you might find it much easier to start with the dot map. She had her kids helping her so she did it over nighttime and she went and got all her data for all Those suburbs. And what she also said was, in the example we used in the video, we've got a 5, 10 and 15 kilometer ring. She was doing it in Sydney and what she said was that because the kind of population mass goes all the way out to the west there, it's very hard even within 15 kilometres. And I forget what figures she said, but it tends to be. Everything's outside that 15 kilometer ring anyway.

Definitely from the CBD. And the interesting thing about Sydney is actually there's three recognised CBDs, North Sydney, Sydney CBD. So obviously they're about a kilometre apartment but Parramatta. And from what I have read, 60% of Sydney's population is west of Parramatta. So I think another person in the beta testing, doing that dot map exercise, she actually chose Parramatta as the central point and did the 5, 10, 15 around there. Because I know that there's a lot of talk about the southeast population of the south.

Would that show up in demographics? If people, if you were doing ring out from Parramatta, could you tell that they were working in Parramatta?

You could tell if they drove to work, how far they drive to work. Here's the interesting thing, actually. If you really want to lose a few hours of your world, don't get on Pinterest or Facebook or do a dot map. What you can do is jump on the census data. You've probably seen the census information, demographic information on realestate.com or investsmart or Domain or whatever, and they'll come up with what's the average age, etc, etc, and go through that and we'll get into a bit more detail about that next module. But if you actually go into the hardcore data and you put in suburb details, you can download a spreadsheet that some of the ones that I've seen are about 80 tabs and they'll have everything down to people who live in unit blocks between three and six stories and six to 12 storeys and real detailed stuff. And they'll say, how far do you drive to work? So there's some information. There was a Melbourne Institute who does every year a huge study on that type of information. And I know that I was doing some research at one stage and just some general stuff that came back that, you know, on average over the last six years between. Between census, actually we were driving extra 30 minutes a day to get to work. So that amount of detail is in those. I think it was, I want to say housing affordability, but it's not so. But, you know, there's that. Those kind of information Which I think are really.

I just wanted to add just one last thing about the dot map there. It's. It's kind of. It's tempting to just dot out the areas that are close to you or even if you're thinking in terms of, well, I'm going to have to manage the renovation. I'm not even going to look at anything that's more than 10 minutes away or something like that. I still think it's worth spending the extra couple of hours to dot map the whole thing because at least that way you can compare apples with apples. You can look at the other side of town and go, okay, well it's only got 4 or 5% or whatever and I'm over here on 6 or 7. So see relative to other suburbs exactly what your suburb's doing and if it's an anomaly or what it is, so you get a much bigger picture. I'm not suggesting you do the whole lot, but at least do a. Even if you were in Sydney, maybe do a 15k ring and then a wedge out into the western suburbs or something like that. So at least you've got it there for the sake of comparison. Otherwise you're kind of working blind a little bit if you don't do that.

Do you recommend using investing software like realinvestor.com look, there are so many different types of software out there. I know. Good friend Jacob has rifehouse.com there's realestateinvestor.com there's a lot of these that are pay per month that give you the ability to get in really quick and say what is your criteria and what are you after? And it will come up with all the properties on the market. And once again, it's another way to lose days out of your life. The real key to making that investment wing and anyone else is looking at investing in those type of resources is if you're very clear from module one of what your buying criteria is and you're very clear from Module 2 on the areas that you think should be targeted, then using that in the next step when we get to module three and actually diving into the information and finding the properties is a really great resource. But what I find is I talk to people who are spending. I know that real estate investor is quite expensive and Wright House is a lot cheaper. But from what I've spoken to people, they will just spend hours every night on those sites and looking at properties and they kind of get all blurred vision because they haven't been through the initial step of Defining their criteria. So what you're doing now is the right steps and it's just like engaging a buyer's agent in the sense that you can be very, very precise with the criteria that you want and know if the property that's being offered to you is the in the right area and has the right criteria that you need. Christine, follow up question. Oh, investor, there you go. Do either of you use investor and how relevant is to research? I have access to investor but I'm not over excited. When you include a specific criteria though, it's okay with some of its other applications. Same answer. You know, it's what's the. I want to say crap in, crap out.

It's easy to get overwhelmed with that stuff and just spend your time. Yeah, because there's so many different ways you can look at things using and it's tempting just to have a crack at all of them.

I know I've gone in there and I've typed in Granny Flat or I've typed in Renovators Delight, I think, which is key. Search terms that are in the ads, marketing ads and there'll be like 15,000 come up and you're just sitting there going, oh my God, this is so exciting. So what if it's towns over 50,000 people and you've got 12,000 and it's kind of like a bit of fun and you get down to, you know, oh, let me add in all these different little criteria to see how I can get down to like, you know, the top 10 houses in Australia that have, you know, 10% rental return and 10% predicted growth and all these wonderful things. And you're looking at yourself, you realize.

You haven't left the house in three weeks.

I know. And then you're like, oh my gosh, this is. I can't afford any of these. And I should have put a different criteria in to start with. You have to start again. So as long as you are very, very clear with your criteria. And we went through that a little earlier with Peter again, you know, understand based on your borrowing capacity and I think what we might do is add in a borrowing capacity calculator that I've got access to. Yeah, let's try to get that up there because I think it's really, really clever because it back ends into where you're looking to buy and gives you some past growth information.

Try and get that up there in the next week.

Yeah, let's try and do that because that'll give you a bit of a head start.

The other thing I was just going to mention there, we subscribe to RP data, but we often find ourselves getting agents regularly to. Particularly if it's the agent that's trying to sell us the house, we ask them to give us a couple of years worth of data for that area. And it's often what we find is, particularly in Victoria and I can't recall what the system is they use here or a lot of them use here, but it'll give you different data than you're getting in RP data and sometimes it's better. And we often find that we actually get more sales recorded for a particular suburb that the agent gives us than we did with our own data. So it's interesting, just for a sake of comparison, before when I started off doing the pin mats, I used to just buy a suburb report from Australian property monitors and I think that was about maybe $250 or maybe a bit less and that would give me all three years worth of sales for that suburb and then I could go off and just do the pins with that. But since then I just hit up the agents and most agents I found in my area anyway, I've done it loads of times. So, yeah, they're happy enough to give you three years worth of data, particularly if you're interested in a property or if you feign interest in a property.

Or you tell me you want to sell.

Yeah, that's right. Tell them what to sell.

I'll be your best friend. It's interesting. I went and had a look at a house on the weekend that we looked at buying in 2001 and it has come back on the market and at the time it was a new construct and was this beautiful property and we were going through the dilemma of buying old or buying new and what should you do? And we ended up buying old $425,000 property that's worth well over 1.2 today and a suburb away. We looked at this brand new three to four bedroom, three storey, beautifully fit out property. Looking a bit dowdy now, but not a lot needed. Maybe some new splashback really and a bit of paint, but nothing really necessary. And it sold at 550 when we were looking and we bought it 425 and it's up now for 900 now it has performed and obviously we've got more growth because we did a renovation on ours as well. But it has performed. But the difference is when we're kind of looking at. It was. And this is probably completely off topic, I'm just sharing just Sort of general share here is that by renovating the property that we bought and accessing the equity, we bought the second and the third and the fourth. If we had bought that property, although we would have got the growth and doubled in value in 10 years, so it's a 7% growth that was experienced there, but we would never have got any new equity. It would have been incremental and we possibly would have had to wait three to four years rather than six months to buy the next property. That's the key of understanding why the renovation strategy works for you. Doing the due diligence. Because those two properties within the two suburbs that we were looking at at the time and knowing the buying criteria, and not just the buying criteria, but how they fit into your goals. Because it's fine to say the growth is there, but if you can actually do something to release that equity, that is the renovation or buy below the market, the growth alone is going to get you an incremental addition each year and you're going to have to wait a while out of the market. So being really clear on this buying criteria, doing this work with the dot map and targeting these suburbs and finding the suburbs, and next week we're going to get into how to get more information out of the suburbs. This is going to be the steps that you have. So regardless of you then going and using other tools like Ripe House or Investor or some of the other ones that are coming up at the moment, instead of doing that or getting a buyer's agent, you can use those and they're going to basically add and validate to what you've done before. So getting this foundation right, I think is absolute key.

Yeah, absolutely. Fundamentals. Get the fundamentals. And the other stuff's just icing, really.

Got to follow the recipe though, right?

Gotta follow the recipe.

Okay. I don't think we have any more questions.

There was some. I'm just trying to find some good discussion in the Facebook this week. Just trying to remember who said it. It might have even been Christine again. But there was a question, a statement in the markets moving so fast that it's hard to buy below the market and you're missing out at option and everything at the moment. We just missed out on one on Saturday which went for. And we were kind of above what we thought it was worth. So it went for another 50 or 60 grand above what we thought was an unreasonable value to start with because we were willing to pay a bit more because that's what it was worth to us. Yeah, just two Bidders that were dead keen to have it and went way up. So, yeah, and one of the things that we'll do now is we'll go back there tomorrow and I'll let a drop all of that surrounding suburb and say that I do a handwritten letter which I'll photocopy to make it look like a proper handwritten letter and it will say that I was the under bidder up the road, put the address and say it sold for over a million dollars. We're looking to buy a house in the same kind of price point right now. If you'd like to sell and avoid having real estate fees, we're happy to negotiate with you, blah, blah, blah. And I've done that in the past and got a few, haven't actually secured one yet doing it that way. But I've got in the door a couple of times and done some negotiations and that kind of thing. So that's some of the problem with the markets moving so fast. If it gets to auction sometimes it's almost too late. You've kind of got to get to it before that if you're going to do the buy below the market, kind of. So it just takes a bit more work in a market.

And I think that's why when I talk about the Trident strategy and having plan A, B and C, Plan A doesn't always work by below the market, especially in a rising market and especially in a market. Look, I can imagine that we're going to see some statistics come out of Tasmania with this $30,000 first home buyers grant that are going to show it becomes a rising market. But the reality is it's an artificial being artificially risen by government stimulus. There still isn't a lot of the economy and population growth there that I would consider necessary. And having said that, that's a general conversation about an entire state rather than specific areas because I know people who are doing very well in specific targeted areas in Hobart in doing renovations. But it's really important that buying below the market is not always possible, feasible in actual fact, as John said, sometimes to get into the market with the right property that, you know, once you crunch the numbers has got the potential. You may even be above the market, but the market's moving. So, you know, I've definitely had conversations with people I think I shared recently that, you know, someone back in 2005 I was talking to and they're still thinking that the market's moving too fast for them to get in and they've really missed a couple of really great growth spurts. And same for people who were spending six months looking for the right property in a rising market. What was $400,000 in January is 440 now because it's moving so quickly. I mean, what I might do is just share. I've got some notes from a talk that I attended last week and as suggested, there was this Westpac economist there, Matthew Hassan, who had a really interesting. He's the author of the Westpac Red Book Report and he goes through every month and has a look at information of what's happening in the market. Now this is for obviously late 2013, but to just give you an indication, they do a monthly survey of. I guess they just call it an attitude survey really, and it goes through and asks people where they think things are and what's really happening. And there's absolutely no doubt that 2007, 2008, 2009, there was an amazing change in the mentality of Australians and we became really, really good savers. Basically a lot of people when they were asked about where's the wisest place to put their money, the consumer surveys were saying, everyone was saying, in savings. That's where it is, save it for a rainy day. The rest of the world was experiencing this GFC, so obviously there were some concerns there. But pre 2007, I think there was 150% of most households had 100% debt of their income level, which means that we were really spending too much. The money that people were saving has gone into their offset accounts. So although the reported numbers are saying that we're not in a better wealth position, those offset accounts aren't really counted as a savings account. So it's not necessarily, well, the numbers are coming through, but what they're seeing, especially in Westpac, where they can see where people are putting their money as well, is that there's just been this huge trend and we had a 30 year period where from 1967, where basically people were consumers and we've slowed down, we've gone into saving. There's huge optimism that's coming through. They usually see a nine month lag in optimism to what is happening in what people saying they're optimistic to actually buy and they've seen that lag come through. It's been nine to 12 months and now they're seeing the housing recovery. His prediction is that there's going to be interest rate cuts in February and May is what Westpac is counting on in 2014. So they see variable rates go down. We're obviously seeing the fixed three to five year rates go up in the recent weeks in October, November, December 2013. But in addition to that, the thing that's going to be the major inhibitor to consumers getting out there and spending a lot more money, he thinks is job stability. And there's still a huge fear around people losing their jobs. And if anything changes, that is one of the big inhibitors for people actually going out and buying properties. Interestingly though, he predicts 2014 that Sydney is going to see another double digit growth. So for people who are saying rising market, have we missed the market? Where should we buy? If the markets move, should we hang back and go and find somewhere else? He's definitely talking about another double digit in Sydney. However, when I kind of cornered him later on and said of all the numbers that you're looking at and what you've seen, where is the opportunity? And he said, I think Brisbane's kind of good too. So, you know, he's reading some numbers and saying that. But yeah, basically what they've said is that the 80% clearance rates they've seen in Sydney is actually never ever been seen before, even in 2003. And they're just, you know, the fundamentals are very, very positive. There's pent up demand in housing. They're seeing one of the things they're talking about, the difference between Sydney and Melbourne is that since 2002, the Melbourne house prices have increased 90% and the Sydney house price is only 45%. So in actual fact, from an affordability issue and where there is opportunity, Sydney is actually still more affordable than Melbourne. So just looking at median price alone is not enough. And credit growth is really underpinning the housing market. Another interesting thing that he shared was that the US housing market during their turmoil in October when they almost fell off the cliff again, they had a small price, a small interest rate increase. Within six weeks, house applications for finance dropped off 63%. So that market, although there was some housing rebound there, there's definitely more of a slowdown as well. So that was interesting. Basically. I guess the thing is that there's a lot of information out there and a lot of people are talking about where to buy, how to buy. As I said, we've got a couple of areas that are having rising market, there's markets within markets, there's the right side of the street that you'll get to in the pricing map kind of stuff. And I mean just some of the data that he shared, the capital growth price predictions reflecting supply in Melbourne of the inner ring was 7.2%, the middle ring growth of 11.5% and the outer ring was 6%. So you know, you're not just talking about one big market, you're talking about different markets within and you know they're really seeing in the suburban fringes that supply is being absorbed and that's a function of affordability in some of those lower price points as well.

Some of the guys that have done the dot map, particularly in the test group, have found that the numbers are quite different from the example we used in the video. And they were down there in Sydney. And even though it's moving very fast at the moment, it's not yet reflected in the 10 year numbers. I think from memory Kim was saying that her numbers are in around the 3 and 4% 10 year growth mark. I think they're in around the 7 to kind of over 11% in our example. I know from when I've done that exercise twice and I know the numbers change. Even though it's a 10 year growth number, the numbers change quite substantially in the space of a year on that 10 year growth number. And you'd expect that that's what would be going to happen with something like Sydney over the next. I would pretty, I don't know, would you predict if you did that dot map again in a month's time or two months time that you would get, get some different numbers in that 10 year growth number?

I don't know within a couple of months because the data isn't usually available annually. But definitely with the change over to the next lot of annual data when it comes out. Because what you might see is the lower the 2003 drops off and the 2013 comes on. So obviously there's going to be a change because we've had quite a lot of growth in 2013 and 2017 and 3 maybe the lower numbers have dropped off. So I think when that new data comes out, I know I've got a friend who waits until, I think it's July 1st when the governor General, Surveyor General in Victoria releases their report. She's right onto it and excited about what's going to happen. It does a new dot net every year.

One of the things that the guys have done so far is reduce the increments that you put the dots at just so you can still see some movement.

So rather than between 5 and 9% growth, it might be 5, 6, 7 or even 5 and a half. I think we've got no more questions. We might wrap for today.

Actually there's one More in the Colvin C in the Facebook page made himself known and he just had a question we might as well cover now since we can talk about it. He just wants to pick our brains regarding good areas to invest within New South Wales for a buy and hold strategy, whether a house or unit, based on your readings, research, etc. Saying, where do you think has the most potential for capital growth within the next three to five years? The only limitation, the property must not be more than 500k.

So he wants us to do the dot map exercise for him.

There was a couple of responses saying, hey mate, the next module you're going to find some good tools. But some of the testers posted.

Yeah, and Kelvin, the questions that you're asking are the right questions, which is, where do I get the growth that I want? You've targeted an area, so you've targeted New South Wales, you've targeted Capital City, was it. Scroll up a little bit. Targeted anywhere in New South Wales with a house or a unit and Sorry, I was trying to read that again. Less than $500,000. So basically you've got some of your criteria. You really haven't nailed it so much. You need to be determining what the capital growth you need to get to your goals is and the time frame obviously is important for doing that. And the suburbs that you're looking at, once again the dot map is going to get you there. You might be constricted by the fact that you want to do the work yourself and that might mean that it's within an hour of you driving. So that might be part of the criteria that you put down on your dot map. It might be that you don't mind outsourcing a 10, 20% premium to a builder to do the work for you. Then you may not be constricted to. That is constricted the right word, constrained to our kind of driving. What we've seen is that the market's on the rise. So where's the most potential capital growth within the next three, five years? Well, it's where the population wants to live, it's where the infrastructure is going and it's where there's a diverse economy that's going to support the population and that infrastructure. So these are part of the questions that you should be asking, but can't give you the answer.

Unfortunately, no. Can I just touch on that? That's come up a few times about just looking at the areas that are within driving distance and that kind of thing. I've just had a friend that recently did A similar exercise across the whole of Melbourne. And he ended up choosing a suburb which was right out of Frankston south because that ticked all his boxes. But it was. He lives in Port Melbourne, so it took him basically over an hour to get there each day. The renovation only kind of took him I think six or seven weeks. And it's a splitter block. So he's. They're buying whole with the trust. Yeah. So and they're both corner. He's actually gone and done a second one now. So it was only six or seven weeks to do the renovation itself. So, you know, back and forth each day for that time. Now he's got his buy and hold property that's going to sit there and, and all the indicators were that it was way better than anything within, you know, 15 minutes drive or whatever's convenient at his place.

Well, you're talking about hundreds of thousands of dollars.

He's going to have years and years of growth out of that.

Well, having said that, I lived in the lower North Shore in Sydney at one stage and our renovation was happening over the eastern suburbs and although it was only maybe 5 km, it used to take me an hour to get there and back or hour to get there every day into a secure older style block of units. And there was only one security door key. So I had to go and let the trades in at 6:30 and get back over the other side of town and time to go to work.

And I guess that's if you know the numbers. Like if you've done the analysis of everywhere to start with, you can go.

Right.

What's that worth to me? Am I willing to sit in. Is it worth 20 grand to me to avoid not sitting in traffic for an hour?

Absolutely. And I think you can always outsource things as much as you want and you can get to that later on. But just getting this nailed first of all, and determining where you're going to look is important. $500,000 is a limit that Kelvin's put there for himself. You could look at Sydney very easily and say, geez, the median is now over $700,000. I'm not buying in Sydney, but as we know, there's markets within markets within markets and you just have to call out an Australian property investor and look at the data bank at the back and look at how many suburbs are less than $500,000. In Sydney I think there's over 20, there are over a million dollars. But the reality is that there is some really great growth corridors have been predicted in population I know that Brisbane and Sydney and Melbourne councils all have infrastructure plans for the next 20 years. I've seen some equivalent of RTA, roads authority infrastructure and road planning for Victoria. You know, one of the great things that was announced in 2013 for some of the eastern suburbs was that light rail that's going to head out towards New South Wales University. So just anticipating some of those infrastructure stuff as well and getting across what the plans are.

Your Mount Barker story, how much did that grow in the end?

Yeah, I think it's like a 43% capital growth between the 2003 and 2006 census. And that was because in South Australia they made the sea change area, Mount Barker commutable to town for most people by putting a freeway equivalent of freeway in, you know, so people could get out to where they really wanted to live and commute to work. Yeah, okay. Oh, Kelvin, there you are.

Thanks Kelvin.

He's going to do the dot map and wing. You've got a question. Would you buy a raw property kitchen? We're ripped out, no walls, needs painting, needs new carpet, new kitchen installed.

Yeah, I would. I quite like it when the, the problem with the renovators delights. If they've just got a little bit of damage, people go, oh yeah, that won't take too much. And often people really don't know what it takes to do it. And sometimes it's actually going to require ripping down all the walls and lifting the floor and doing all that stuff. And if it was actually presented that way to start with, with no walls and no floor and everything like that, then that will horrify people and make it better for me. But if it's an unfinished job, I guess things you've got to watch out for is if there's been illegal building work, which is one thing that can really bite you and that the work's been carried out properly, particularly if it's any kind of structural work. Because if you're selling that, if you're doing I do mostly structural renovations, but if you're selling that on, you're going to be responsible for whatever work is done there.

And it'd be really hard to get a builder to take on that work because they then are pretty much signing off on the prior work as well.

Yeah.

And you might even get trouble in getting the property because a lot of banks are not going to give you funding for a property that they would see as high risk. So they may do it at a higher loan to value ratio. That is you might have to put more money into it. But I've seen some gutted properties that people have wanted to buy and the banks essentially said, we take on this title, we take on the responsibility that if you default, we're going to have to sell this. And we don't know how you are as a renovator or any of this stuff. The reality is there might be opportunity there, but you may have to be responsible for financing your square in other ways.

Has that got worse or has it kind of always been the case?

No, it's always been the case. You just have to think banks are sitting there going, they're taking over the title. They might be taking over the responsibility of paying someone $500,000 for something you're chucking in 50 grand and they're looking at this property. A, you have to get three comparable sales. Now, there's some lenders at a 20% loan to value ratio that they'll take the contract price. But usually a valuer is going to look at the property and if they go through the property and go, this is a gutted property with nothing there, it'd be really hard to get some finance for it.

Yeah. So I guess if you were going down that lot, that track, you'd really want to select your lender pretty well too, wouldn't you?

Exactly. And it's a unit, he's saying, so gutted units. If someone, to be honest with you, wing, if someone's had a bit of problems with a unit, which is usually a lower cost point in doing a renovation, in getting that across the line, you might be looking into more due diligence around. Maybe the body corporate has actually stopped the work that's being done there as well. You might want to get into a little bit more detail on that because invariably what you spend on a unit is usually less than what you'd spend on the house, just by the virtue of the fact that the price point is usually lower. And if someone's jumped in there and pulled out half the kitchen and finished the job and can't get out, then there might be great opportunity there. It could be desperate. It could be a personal financial situation that has prohibited them from doing that. And it might even be an opportunity for you to say as part of the contract that they have a working kitchen kind of fitted at a low price point so that you can actually buy the property, because they're going to have the same trouble in selling it to you as they end up selling it to someone else. That's my thoughts.

Yeah, good point.

Okay, let's wrap this guys, thank you for all of your questions and for so many of you joining us live. I know that some people had to send some questions in. Next week we're on at 8 o' clock back to the evening slot and we're following it back to the day slot so we can fit everyone in. Look, if you have any further questions, please put them on the Facebook group. There are so many people there to help. And as I said, don't be shy. Yes, we can see your last name, but the audio recording of this and all the future calls will be available on the Facebook group. The easiest way to find these is to search for webinar in the search box at the top right hand corner of the Facebook page and you can download the MP3 file. And we're just making the videos downloadable as well this week as well.

Yeah, that's right. The first one is up already. We're just kind of still tweaking a little bit to find out exactly what is the best size. Because it's an hour and a half recording. It's way more convenient just to have it as one video. So it's not a huge video at the moment like you used to in the modules. It's only kind of 400 pixel wide. But I think, you know, let us know what you think. If you want us to try and tweak it a bit more, we will. And yeah, at the moment I'm just posting the audio files in the. In the Facebook page. We might find a better way of doing that so you can play within the page too. I'm still working out some of the technical stuff around the edges of that, but this week we'll get it up a lot quicker than we did last week.

Oh, good. And I guess, as always, if you've disclosed some information that you don't want to be made public on this call, or if we've mentioned something that we shouldn't mention, please let us know before we put that recording up so that we can take it out. And as of midnight tonight or first thing, when you wake up tomorrow morning, module three will be ready. My God, it is an absolute bumper. Love it.

I do too.

The funny thing about filming this module was we used to stop for filming and as you can. I'm not the best presenter, so I often would make mistakes. And we have hundreds of hours of footage which turned into an hour maybe of presentations. But I got better.

I was going to say, you are.

Now, but we'd stopped recording every now and then as we were going through this module and just go, oh my God, that was so good. If we knew that when we started, we would have been light years ahead. So I just can't wait to just give you guys the skyrocket ahead in doing this. Don't give up on that dot map. Keep going. Because it really is a systematic part of the research. We're giving you obviously the tools now to get down to the suburb in module two. Module three, we're going to get into all the detail on how to really delve deep into the suburbs and apply your criteria. Chose a property investing strategy to that so you can find where the potential is. And yeah, basically don't give up. Keep working on those dot Macs. We know they do take a few weeks to do so. Don't think that you're the only one sitting there.

I think we probably get the kids onto it.

Yeah, exactly. Maybe a family opportunity.

What do you reckon? 10 cents a dot? Really? That's pretty good.

One kid could be on like the over 10%. That could be a $0.20 dot. Depends how old the kids are. Right. So yeah, basically. Thank you very much. This is the end of Module 2's question and answers. Please post any questions in Facebook during the week. If you can't attend the call next Tuesday evening at 8pm Let us know and send us a question through to supportourpropertysuccess.com and all the best to your property success this week.

See ya.