Your process of looking for and buying properties

Hello folks

How do you all tend to research and purchase process - what tips and processes do you follow?

Curious to hear the methodology you follow, how you target locations, and so on.

This will help as part of me while building a portfolio.

Many thanks.

 

I think to start off this post has some really good resources with research websites:
The Ultimate List of Property Research Websites

My very short version:
1. Determine your budget, borrowing capacity and investment strategy
2. Once these are determined then you consider the cities & suburbs that fit your criteria, factoring in whereabouts the city is currently sitting in the property cycle i.e. rising/declining/bottom/peak
3. Look at fundamentals of these shortlisted suburbs/cities, upcoming infrastructure/projects, employment/population aspects etc. Key question here is - why would people want to move & live here?

My videos could also help - lots of "how to's":
Lend Power

Cheers,
David

 

1. Open wallet, let moths fly out.(determine budget)
2. Put on blindfold & throw dart at map of Oz/target area (determine location)
3. Shake the tree & see what falls out (look at aged listings)
4. Get out thumb screws (negotiate)

 

Gotta love a smart a-se

 

This is my rough approach which I've posted before. Basically it takes a wide to narrow in approach trying to reduce risk at every step.


Goal Due Diligence
1. Before each purchase determine where I am in my portfolio and what the goal is for the next purchase. Is it a CG buy, CF buy, Neutral buy.
2. What strategy do I intend to employ for the purchase. B&H, Reno, Develop or a mixture
3. Ensure I have all my finance ready, and I know exactly my budget and how far I can go. Get refinancing of equity consolidated, pre approvals done, give lawyer and anyone else on the team a heads up that we're about to go into battle. Then:

State Due Diligence
1.Which states do I think are at the optimal buying segment of the property clock, (7-9 o'clock mostly for me). I use HTW reports, Core Logic Capital Market Reports, Terry Ryder reports, any other on line reports, Property magazines and the media (to gauge sentiment mostly, and of course chatter on the forum as well as engaging with my peers for property market discussion. I try to make the best choice based on a mixture of all those factors. Choosing the state is a big decision for me. Once chosen, then:

Suburb Due Diligence
1. Determine how far I want to draw a radius around my map from the CBD. Is it 5,10,15, 20km etc. Usually what will determine how far I go from the CBD is the particular state i'm looking at, the strategy i'm employing and any specific opportunities in areas that may be worthwhile exploring.

2. Choose a few suburbs that meet my buying criteria. I look for value suburbs, eg suburbs that are cheaper than their neighbours but share most of the same fundamentals to make them grow which is only a matter of time, the 'ripple effect'. Use websites like REA, Domain and even property magazines might alert you to a suburb in your chosen rough area that you can look at and do further DD comparing prices of dwellings to try and find that 'value surbur' or two. Of course make sure the suburbs have the usual good growth drivers like transport, infrastructure, amenities, cafes, hospitals, trendy hubs etc. Once I've narrowed it down to say 2 suburbs I then look at historical CG, SOM, Discounting Rate, Vacancy Rates, Supply/Demand etc. Property magazines and on line sites have all this. I make sure I use at least 2-3 sources to corroborate the data for further reliability.

Demographic Due Diligence:

1.Research what the demographic is, and what they want, in your chosen area. Is it detached housing that is most prevalent? Villas? How many bedrooms is most common? Most wanted or common size of dwelling and land (so you don't buy a 400sqm home in an area that really values 500+sqm for example), How close to transport? Families or singles? Students? etc Any specific nationality in the area that may influence your purchase?

Dwelling Due Diligence
1. When I know exactly what I am looking for after I have my list, I troll all real estate websites and look for stock that fits my description. I also call probably 10 or more REAs in the area to tell them what i'm looking for, i'm preapproved and ready to buy right now and ask that they alert me to anything that they think i might be interested in. Having 15 ppl looking for me is better than just 1 person. I also first make sure any dwelling I look at is not next to any major power poles, cemeteries, very busy main streets, noisy kindergartens, not in flood areas, bush fire areas, high crime rate areas etc.

2. When I have 'acceptable stock' in my sight, I will then use RP Data to do what I call 'Vendor Due Diligence'. See when it was bought, who bought it, for how much, etc etc. I want to know as much of the story as i can to try and put a picture together very fast to basically try and determine just how motivated the vendor might be. Really this only should take 20 mins. I then call the agent and discuss with him the property I am interested in to try and learn from him as much as I can. (i'll leave it at that for the agent because this is getting too long already).

. Basically from there its a negotiation process. I try to find many properties that meet my criteria and put offers on all of them trying has hard as possible to buy BMV and create equity on the way in and also try to buy on favourable terms eg delayed settlement, building and pest clause (a negotiation tool in its self), Subject to finance, etc. Having said that it depends on the deal. If its in my interest to go 66w then I will

 

Sackie
How long does it take you to work through all the steps? Personally I couldn’t be bothered with all the effort, which is why I prefer shares. Respect to you though, and even more so for your time to post above tips/ what you do. Cheers

 

Hi Mate,

In the early days it took me longer. From beginning to end doing all those steps above probably about 6 weeks...maybe 10 hours a week. But you learn sooo much in the process .

Doing it nowadays I can start from scratch and do complete DD in any market on any property in about a week, 10 hours give or take. With experience you really get alot quicker. Although I have been obsessed with wealth creation for as long as I can remember and willing to do whatever it takes.

 

Awesome, who needs the lottery when you’ve got that drive/knowledge/experience and skin in the game

 

Don't get me wrong, I'll take the lottery too!

 

Wouldn’t we all in the meantime I’ll continue on as a hvac plumber

 

Thank you all - this is great info.

Quick question - do you also factor in historical capital growth and historical median prices as a key piece of data to use? Also, how do you identify which suburbs are 'poised for growth' - someone mentioned '7 to 9 o'clock' - do you use any tools/stats or data to help identify such suburbs and locations?

Many thanks

 

Hi Brody:
1. Build a team around you of qualified professionals:

Build Your Team – 3 Key Contacts Before You Go Home or Investment Property Shopping

2. Put together a list of things which are negotiable or non negotiable when it comes to you selecting a property for your portfolio. With clarity comes certainty. When you have this list, you'd be able to discard whatever that does not meet that criteria. Early on in our journey we came up with a strategy document which clarified for us what a type of property needed to do to fit in our criteria. Here is a copy of this:

Investment Property “Strategy” – What does it look like?

 

Was in my post above .

Suburb Due Diligence
1. Determine how far I want to draw a radius around my map from the CBD. Is it 5,10,15, 20km etc. Usually what will determine how far I go from the CBD is the particular state i'm looking at, the strategy i'm employing and any specific opportunities in areas that may be worthwhile exploring.

2. Choose a few suburbs that meet my buying criteria. I look for value suburbs, eg suburbs that are cheaper than their neighbours but share most of the same fundamentals to make them grow which is only a matter of time, the 'ripple effect'. Use websites like REA, Domain and even property magazines might alert you to a suburb in your chosen rough area that you can look at and do further DD comparing prices of dwellings to try and find that 'value surbur' or two. Of course make sure the suburbs have the usual good growth drivers like transport, infrastructure, amenities, cafes, hospitals, trendy hubs etc. Once I've narrowed it down to say 2 suburbs I then look at historical CG, SOM, Discounting Rate, Vacancy Rates, Supply/Demand etc. Property magazines and on line sites have all this. I make sure I use at least 2-3 sources to corroborate the data for further reliability

 

We looked at what the properties were selling for at the last peak as a guiding principle (using price finder)
We also reviewed vacancy rates on sqm research
Look at what other similar properties are selling for in the area
Look at rental returns
Ensure that there is demand for that type of property in the region based on the demographics

 

First I go to Bunnings and look for a nice shiny shovel, then I bury my head in the sand and transfer a 10k buyers agent fee to whoever the flavour of the month guru buyers agent is at the time. Then I slog my guts out for another five years to save up a deposit and do the same all over again. That is unless the prior property is now completely clapped out from bogan tenants. Then I spend the deposit money on a tart up reno and lease it out again. I would extract equity to do this but I usually can’t because their has been little increase in the property price over inflation in this time and the new apra rules won’t let me cash out anyway.

 

lol
love this latest comment

 

another lol

gotta love this