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What to look for in an IP?

Discussion in 'Where to Buy' started by AdamPineapples, 31st Oct, 2015.

  1. AdamPineapples

    AdamPineapples Well-Known Member

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    9th Sep, 2015
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    Location:
    Melbourne
    Hey guys. Was just hoping to get some opinions.

    What are some important factors for an IP to make it a better investment? I know location is key. But I was wondering what about the location will increase value?

    Eg Being close to the city/beach. Being near a train station etc

    Interested to hear your views.
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Location:
    Adelaide, SA
    Private and public sector both spending money in the area. They do their research before investing in an area as they have a target return. Piggyback that research - if an area improves (and / or changes demographic), it'll likely go up in value.

    Amenities too - employment hubs, public transport, schools, shopping etc
     
    bernardblack likes this.
  3. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Location:
    Sydney
    Very good schools will really push up prices in an area. Close to uni and hospitals (-->high demand).
    But combine it with, there is no more vacant land available nearby. All things being equal, and you have the population wanting yo live there, the prices have no where to go but up.
    And generally, in Australia, you want to be close as possible to the city centre. 2km out vs 20km out... unless the further out place has some reason why its attractive, (e.g. beach?), generally long term you'll be better off with the place closer in.
     
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  4. Rixter

    Rixter Well-Known Member

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    18th Jun, 2015
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    Location:
    Portfolio Perth Brisbane Sydney Melbourne
    Hi AP,

    Quite a few of our properties have doubled/tripled in value over the course of the last decade.. Rents on those have doubled & some close to tripled also.

    I believe we have attained that growth because early on in our investment journey we decided to target / purchase in areas that had recently been approved for or were in the planning stages for gentrification.

    We looked for the following 4 sectors injecting money. -

    Government, Commercial, Retail & Private sectors

    We discovered this ultimately uplifted & beautified the area resulting in people's attraction thus moving in and creating demand.

    We have found this to work very well if you are looking for short to medium term capital growth so as to leverage against and build your portfolio faster.

    Typically these are some of the signs we looked for where sectors were injecting money -

    A/ Local/State/Federal Government. ie Major arterial roads, Govt Depts locating to area, Street Scrapping, New Public Transport, Recreational facilities, Hospitals/Medical facilities, Suburb Redevelopment Authorities being formed. etc

    B/ Big Multi National Retail & Commercial type companies. ie Major Shopping Centres, McDonalds Hungry Jacks, KFC, Bunnings, Harvey Normans, Good Guys, etc. These companies spend $Millions on market research before going into and setting up shop in an area. If there was no current or immediate future demand for their products and services they would not be moving in, so leverage off the back of their research.

    Sources for information as part of your due diligence - You can check out all the federal/state/local government planning & development websites from this one convenient link -

    http://www.oultwood.com/localgov/countries/australia.php

    Other sources I use to gather info are from all the various big multi-national company websites, local newspapers, community news, local businesses, and people in the area.....general networking etc.

    C/ Private People/Investors. ie Owner occupiers and Investors bowling over old houses then rebuilding new modern homes and redeveloping town houses / villas.

    Get out and about. Jump in your car and drive around the area. Better still is once you're in your prospective area hit the streets by foot. You will see so much more on foot than by driving.

    If you can apply the above mentioned strategy into a suburban metro area that is already primed for short to mid term CG due to where is sits in the current property cycle you can really turbo charge your returns to well and truly outperform market averages.

    I hope this provides some food for thought.
     
    samiam likes this.
  5. AdamPineapples

    AdamPineapples Well-Known Member

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    Location:
    Melbourne
    Wow alot of information to process.
    I'm hearing alot of people saying to piggy back of other companies market research. What kind of research do these big companies do? And how is retail market research able to convert to real estate research?

    Sorry for the silly sounding question but I'm just curious.

    And you mentioned something about cycles? I've heard people referring to 'cycles' when it comes to real estate? Care to explain? Or point me in the direction of something that will haha
     
  6. Rixter

    Rixter Well-Known Member

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    Location:
    Portfolio Perth Brisbane Sydney Melbourne
    They conduct in house/commission out agencies to research looking to identify current/future market demographics & demand for their products and/or services in areas. Where the demand is found, is domiciled in close proximity in or adjacent to those areas.