The Ultimate Guide To Renovation Course - Module 2: The Suburb Selector Software Part 2

Welcome back. Now we move on to step four. This is the exciting part where you actually get to go into more analysis on this shortlisted group of suburbs that you have. So if you go to your workbook from section 3, you print this out and you actually fill it in for each of your shortlisted suburbs. And this is going to give you all the information that you need on that suburb so you can get down to that one suburb where you are going to start doing your research. So now let's move from step three to step four in the suburb selector software. So I'm going to hit next here and I've come back with the suburbs on my shortlist. So I have Braybrook, Coburg, Footscray, Maramynong and Reservoir. Now we've actually got a lot of information that we prepared here for you that you can go through and start doing your analysis. So there might be some other criteria that you may apply. So you may apply something like vacancy rate. So you may want a vacancy rate as a criteria of less than 3%. Now, vacancy rate is generally thought of at 3% that the market's in equilibrium, which means that there are as many people looking to rent as there are properties on the market. So we don't want a vacancy rate over 3% because there's a lot more properties on the market than people looking. So you might put that criteria down that you want to have a vacancy rate of less than 3%. And this is where we can actually start looking at some of that information. So first and foremost, I might actually have that criteria of vacancy rate. So I might go in here and have a look at the bottom section of the rental data, suburb data and suburb analysis. So I've opened this up for Braybrook and let me also open it up for Coburg and let's say Footscray and Maramynong and Reservoir. So I've got this bottom section of information highlighted because I want to see maybe a criteria around vacancy rate. So I can see here that rental yields coming through from Braybrook. I've got the vacancy rate of 1.3%. Now, this tells me about the total dwellings, it tells me about the percentage of turnover. So I'm getting an idea of the turnover in that suburb. The days on the market is also very interesting in the last quarter and the last year. So this means that in the last quarter the days on the market has come down. So this indicates to me that there' more movement happening in sales in this area. Percentage of renters. Once again, we can verify that 45.9%. The average weekly income, $571. Now, this is not a high income, and arguably some people actually want to have an income over maybe $1,000 a week, so that they believe that that is a gentrified suburb or a suburb that has more capacity to add value. So this might be a criteria that you've heard from another data source that you want to apply, and this is where you can start applying your criteria. We've got a percentage of public housing, 20.9%. Now, if we just quickly look down to the next suburb, it's 2.1%. So this tells me that in this suburb there's a lot of public housing and it might be something that I want to be aware of when I look into this suburb in a little bit more detail. Very high crime rating. And there's some investment hotspot information that our friends at Ripe House have provided for us as well. So some blue chip areas, some cold zones and gentrification areas. And this is just another criteria that you might apply to your assessment. So let's just go back and have a look at each of those for the suburbs that we're looking at. So vacancy rate, Braybrooke, 1.3, Coburg 1.8, Footscray 2.8. So it's getting close to that 3%, Maramynong 2.5 and Reservoir, 2.1. So they all fit our criteria here. Now let's have a look at, say, the total dwellings. So we see here, Reservoir's got over 13,000 dwellings. We've got a couple of thousand in Maramynong, Footscray, 6,000 in Coburg, and in Braybrook we've got 1600 dwellings. So we actually applied a criteria of number of sales per month that we wanted to have a look at. So it's interesting to actually look at that yearly turnover of stock and what that number of sales actually looks like in compared to the suburbs. So if you have a very small suburb, there may not be a high turnover of sales. Now, from our criteria, we've already wiped those out. But it's interesting to see here what number of sales that we're looking at compared to the actual size of the suburb and compared to other suburbs. So days on the market here, once again, we saw that Braybrooke has dropped, which indicates more sales. Coburg, interestingly, it's gone up, but it's still below, what, the 74.5 days that it takes to sell a property in Braybrook. So it's only 70 days in Coburg. We've got in Footscray the number of days in the market last quarter has increased from 60 over the year to 75 in Maryminong it takes 95 days now to actually sell a property. It used to be 90. And we've got around about the same in reservoir, around about 58 days. So this tells me that there's a lot of demand happening in the reservoir area. Only takes 58 days to sell a property and once again up in Coburg about 70 days. So that's interesting. Let's just do a quick comparison of those average weekly incomes. We had 570, 840, 779, 960 and 684. So this tells me that the people in the Maramyrnong area actually have a higher weekly income. It might be a criteria that you apply. It may not be public housing. We can see reservoir 5.6% Maramynong, 0.2%, 7.7% in Footscray, 2.1% in Coburg and that 20.9% in Braybrooke. Now if I was going to to get down to one suburb quite quickly, I'd possibly say because of that high level of public housing and the high crime rate and the low weekly income and the high days in the market and the very high number of renters out there, this might be an area that I say, hey, for now this is not going to be one of the suburbs that I actually go through and do the full assessment that I'm about to do. So interesting information. So let's just have a look at the next criteria. We've got the second here, the capital growth. So I'm just going to pull that up for all of these suburbs. So you can see here this information really is collated and it saves you a lot of time in finding this information from various sources. And it's updated monthly for your convenience. So let's have a look at that second section. So here we have that median house price, the quarterly growth. So we can see what's happened in the last quarter compared to the last year. So we can see in Braybrooke we've got that one year growth of 11.7%. But in the last quarter 5.1%, 10 year growth of 8.7. We've got some information here about the sold price in the last quarter and the sold price in the last year. So it might indicate that although the median price in the last year is 520,000, there's actually been a spike in values in the last quarter. So it may no longer be within the criteria of what you can afford. And this kind of just highlights that to you. Interesting information. Once again, we're just validating that percent number of sales per year, the vendor discounting. So we can see here this information doesn't always come through for all suburbs. And as for most of this information, sometimes it's not statistically relevant. So there's not enough information for us to actually put the information in there. So if you see a 0 or SNR not statistically relevant, that's what this means. Now vendor discounting is the amount of discounting of properties that have actually sold below what the marketed price was. So if that marketed price is not initially indicated, for instance auction, or if that price is actually that it's sold for, is not published, then that information is not relevant and it's not available. So we don't have it. But when it does appear, it's really great indicator because it might give you an indication that if you're ready to put an offer in on a property, so for instance, on a $500,000 property and they say that it's a 5% vendor discount, then you may actually be able to come 5% or 6% or 7% and negotiate up to the 5% off. So you might go in at a 460 price thinking that 5% off is $475,000. So it gives you a little bit of indication of how you may negotiate the price. So it's a great key performance indic we include in our assessment. Now this is also some really interesting information. This is the spread of values between 2 bedroom, 3 bedroom and 4 bedroom properties. Now this is live data that's updated monthly based on sales that have been seen in the market. So some of it sometimes doesn't always correlate, but what it does give us an indication for those people that are maybe looking at a renovation twist strategy and adding an extra bedroom under an existing roof, then it gives you an idea of what the additional price point you may get for that property. So it's really interesting here that you say, you know, for instance we have a look at this suburb that we've got here, Coburg, and we've got the spread of values of two bedroom house at $616,000 is what the median price is for a two bedroom property. But a three bedroom property is $826,000, a four bedroom property is $881,000. So obviously add an extra bedroom to a two bedroom property and make it a three bedroom property. Then there's over $100,000 of perceived profit that you could potentially make there. But making a three bedroom property into a four bedroom property, not as much. There's less than 50, $60,000. Now this information you will verify further because there's no point in actually creating a four bedroom house, for instance, when everyone in the area wants a three bedroom property. And we'll find out that further when we go through and do the analysis of deep analysis on each of these suburbs. But this is interesting information that we're pulling up. So let's just do a comparison against these suburbs that we're looking at. Once again, we're looking at the vendor discounting. There's nothing here that I just wanted to look at. When the growth has been. So there's been a bit of growth across Coburg, for instance, in the last year, but not so much in the last quarter. We've got the sale price is around about what the sole price has been in the median. We've got the number of sales in Footscray. We're looking at lower growth in Footscray over the last quarter, one year and three years compared to the other suburbs. We're looking at Maribyrnong. The last quarter hasn't been a lot of growth at all. Vendor Discounting is at 8.5% which is on the higher side of all the suburbs. We're looking at and reservoirs. So let's just have a look at the difference in the bedroom sizes. So there's $130,000 gap between in Reservoir between a three bedroom and a four bedroom. We're looking over $200,000 gap in Maribyrnong between a three bedroom and a 4 bedroom. So 3 bedroom at 790, we're looking at the difference between a 3 bedroom and a 4 bedroom in Footscray. That goes from 720 to 860. So about $140,000 gap. And once again, as we looked in Coburg earlier, there's only a $60,000 gap. That less than $60,000 gap for the three bedroom to four bedroom. So this is what's so great about sheet four is actually playing these suburbs against each other. We're looking at all the information that we have at hand and we're actually assessing which one we want to take forward. So who is going to win our competition? Well, let's just have a look at the last little toggle here that we have and it just gives us a little bit of insight into the suburb. So What I'm going to look at is location, mode of transport, who's actually living in the suburb, just to get a bit of information about that suburb. So, for instance, we've got the distance from the cbd, we've got the primary mode of transport, so it's train for everyone. So if I wanted to buy a property and later when we look at the demographic information, we find out that a lot of people use public transport, then I might actually curtail my search for 500 meters from the train station, for instance. Instance. What it also tells us though is that there's other transport amenities as well. So you can see here Coburg's got other transport amenities of 99, we've got Braebrook at 86. So this is like buses and tram stops. So interesting I'm looking at amenities. So not a lot of shopping centres in Braybrooke, so you don't have to travel to shop. There's seven schools. And here in Coburg, for comparison, we've got five shops, 12 schools. So it gives us an idea that it's actually a self contained suburb. We go down here, we've got one shop, seven schools in Footscray, no shopping in Maribyrnong, six schools, no shopping and 10 schools and Reservoir. And the interesting thing about this is that when we get into the demographic information, we'll have a look at what the typical household looks like. So the fact that there may be no schools, there may not be a big deal if there's no kids in the suburb or a smaller amount of kids when we look at it in comparison to the state. So just information that we're building up here to get a feel for the suburb that we're looking at. So we can see here a lot more demographic information, we can see some employment information and a lot of the census information that will allow us to then take this information and say, do we want to go forward? Obviously we have five suburbs here, so it's time to make a choice on what suburb we're going to take forward. Now, you might choose all five suburbs, you might choose just three suburbs. So remember when I said print out your workbook, you might actually print out the workbook three times and do this analysis for three suburbs and before you come up with the final suburb that you look at. Now for the point of this exercise, I'm going to choose one of these suburbs and I'm going to choose Coburg and I'm going to tell you some of the reasons why. So if you recall, we actually had a really good average weekly income. So I think that's a really healthy sign of the suburb. We had a low public housing compared to the 20% that we saw at Braybrook. We have a good rental yield at 3.5%. We have a low vacancy. We have a good level of 6,000 properties, over 6,000 properties in the area. And some of the other suburbs only had 2,000 properties. And we also, when we had a look at some of the statistics here, we had a really good number of sales per year, 323 sales per year. There's a little bit of vendor discounting. And the other thing that showed me that it's a healthy suburb and is vibrant is that we've got the days on the market have actually increased a little, so I might have the chance to actually get into this market as well. And when I had a look at the difference between the two bedroom and the three bedroom spread of values, it indicated to me that there was over potentially $200,000 there in difference. Now if I could find a property that was a two bedroom property and take it up to a three bedroom property under the same roof line, then there's potential to add a whole lot more equity if the renovation strategy is what you want to enact here on this property. So there's one more reason that I like Coburg. Do you remember in the workbook when we did the analysis on those reports and it actually came up twice. So I go back here, you remember it came up in the top 100 renovators report Coburg appeared. And also over here in the Residex prediction report, it came in at number 44. So two more reasons why Coburg has appeared on my list and the one that I'm going to take forward and do a whole lot more analysis on. So that's it for location Masterclass in module 2 of the Ultimate Guide to Renovation. We'll continue with the location masterclass in module three.