Key statistics in assessing property investments

Discussion in 'Property Information Resources & Tools' started by Btaylor, 7th Mar, 2017.

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  1. Btaylor

    Btaylor Well-Known Member

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    Which key stats/numbers do you consider when looking for investment properties?

    I consider the following to be important:

    - gross rental yield (higher = better)
    - days on market (less than 50 and trending down? lower = hotter market)
    - Vacancy rate (less than 1.5%?)
    - Auction clearance rate (trending up? above 70%?)
    - % stock on market

    Does anyone use these sorts of figures and have benchmarks that they stick to? Eg. Gross yield must be above x% to be considered?

    Does anyone use DSR data? DSR data - scoring supply and demand ...thoughts on its usefulness?

    Cheers,
     
  2. ashish1137

    ashish1137 Well-Known Member

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    So have you bought something considering all these constraints?
    ;):)
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    Gross yield is a useless measure - high outgoings will negate any benefit. Eg high strata levies, expensive insurance, concierge, inclusion of outgoings (power/water usage/internet) in rent can easily consume the extea rent.

    Use only nett yields which are comparable across buildings and other asset classes.
     
    Last edited: 7th Mar, 2017
  4. Btaylor

    Btaylor Well-Known Member

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    Obviously an analysis of net yields would be done for individual properties before purchasing. I was talking more about narrowing down for potential suburbs. @ashish1137 Yes, I have haha. Might not tick EVERY box but I think the above should be considered at least.
     
  5. HUGH72

    HUGH72 Well-Known Member

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    A requirement that the suburb has a vacancy rate less than 1.5% is too limiting in my opinion. I'm happy with sub 3%.
     
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  6. ashish1137

    ashish1137 Well-Known Member

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    The very basic thatbi have kept till now are:

    1. Budding areas
    2. Purchase price lesser than current suburb's median and nearby suburbs median
    3. End value greater than the value that I am paying for similar properties
    4. Rentals per week higher than purchase price divided by 1000
    5. Good demand in nearby suburbs or nearby suburbs listed hot based on my visit and understanding along with articles and writeups/ speculations
    6. Upcoming infra or good infra in nearby suburbs
    7. Usually, you dont see stats for such suburbs at least until 3-4 years later.

    Regards
     
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  7. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    I know we shouldn't aim to time markets, but if you can explore the relationship between DOM, number of sales and median price and buy in at the appropriate time, you will do better than just going in at any point in time. I've written an article about it on our website entitled, "A quick way to analyse a market or suburb".

    Gross yield is really a blunt instrument and more of a macro indicator. I would never base cash flow predictions on it.
     
  8. Btaylor

    Btaylor Well-Known Member

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    Thanks for the feedback guys. @Andrew Hancock will definitely have a read of your guide. I think buying when there is some indication of an upswing is always better than just going in randomly in the cycle.
     
    Last edited by a moderator: 14th May, 2018
  9. standtall

    standtall Well-Known Member

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    Talking to 3-4 agents and spending a couple of weekend attending opens beats everything in my opinion.

    All publicly available statistics are at least 3-4 months old and you can't read them literally e.g. a 2% vacancy rate in one suburb could mean a completely different thing compared to same 2% for another suburb.

    Statistics are only useful when you look at them in a trend line and most public data sources provide snapshots rather than trends.
     
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  10. Btaylor

    Btaylor Well-Known Member

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    +1 Definitely agree. Attending opens in person and having a good relationship with some agents in the area really helps to gauge the market (and the desperation of buyers!)
     
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  11. Peppas

    Peppas Well-Known Member

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    Maybe a stupid question, but does the value of these statistics, ie yield and vacancy rates become more valuable in a slowing market where property might have to be held longer for capital gains to be worthwhile?
     
  12. Todd

    Todd Well-Known Member

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    To gauge the state of a market right now take a look at boomapp.com.au. Same stats as dsr but it's free to sign up.
     
  13. Jamesaurus

    Jamesaurus Well-Known Member

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    T
    Just took a look at this website- do they update the info regularly?

    I found the DSR /100 score easier to use
     
  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Can one borrow against the property...........

    Quite often, people's hair is on fire with excitement about the yield or griwth pice they have found only to have water tossed on that excitement because their personal resources arent a fit.

    Some primary examples are

    • Serviced apptments
    • Sub 40 sqm
    • Restricted inner city postcodes
    • Mining postcodes
    • 4 or more dwellings on one title ( at lvrs > 80)
    • Mixed use zoning at > 80

    and a bunch of other things

    ta

    rolf
     
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  15. Jamesaurus

    Jamesaurus Well-Known Member

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    Yeah I agree.. if you dont have leverage and have to buy outright for one of the above situations then it loses this key advantage that property has over other assets classes where no or smaller leverage applies
     
  16. datageek

    datageek Well-Known Member

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    Yes, data is updated monthly.
     
  17. PresentNow

    PresentNow Member

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    1. Days To Sale - indicates how liquid the area is, especially if you are thinking of buying and selling.

    2. 5 Year Growth Data, 10 Year Growth Data and 20 Year Growth Data.

    3. Difference between the cheapest house in the suburb vs. the median house price of the suburb - this gives an indication if there is enough potential for renovation. Also look at average 2-3 bedroom homes prices vs. 4+ bedroom homes and see if there is any potential to renovate and add value.

    4. Consider suburbs that are right next to hot suburbs. When people search for properties they will sometimes tick "surrounding suburbs" box, and if the suburb you are looking at is quite expensive, and the surrounding suburb is reasonably priced, then there is reason that the property will increase at a faster rate compared to other suburbs due to people naturally finding out about the "Surrounding Suburb". The caveat is that there are no negative influences in the cheaper suburb that will force it to remain cheap, i.e Crime Rates, Environment Impact, Lack of infrastructure etc...