How To Find The Best Suburbs To Invest In (Part 3/4)

[arve url="https://www.youtube.com/watch?v=_pPHjI5ubbE" mode="lazyload" align="center" /] When investing in property you want to invest in the best area possible to reduce your risk in a bad market as well as get epic returns in a good market. Book a Free Strategy Session - https://onproperty.com.au/session/ 0:00 - Introduction 1:10 - Rules to follow to exclude bad areas and maximise your returns 2:10 - Metro markets outperform regional markets 2:45 - Houses completely outperform units 3:20 - Properties closer to the city centre perform better than properties further away from the city 5:48 - Why we aren't looking for "Hot Spots" but rather looking for solid long term growth 7:20 - Timing the market for maximum results 9:11 - Next steps once you've chosen your market 10:42 - Comparing suburbs to each other to find the best investment opportunity 13:08 - This is one of the biggest decisions you will make, so don't rush it 14:29 - Maximising your chance for cash flow 14:58 - Special free offer if you want extra help Resources Mentioned in this Video Location Score - http://locationscore.com.au Transcription: When it comes to investing in property, you want to buy in the best area possible to both reduce your risk in a bad market as well as increase your chance of getting epic returns in a good market. So in this episode of this series, we want to talk about how to find those good quality markets and those good quality suburbs. Hey, I'm Ryan from on-property, helping you achieve financial freedom. Today I'm joined by buyers agent Ben Everingham from pumped on property. Welcome Ben. Thanks man. Happy to be here. And this series is all about first time investors and how you can reduce your risk, maximize your turn and achieve financial freedom. And we told you in the last video, if you haven't watched it already, I'll leave a link to that down below, but we talked about purchasing those foundational properties that are gonna go on to achieve financial freedom for you and with those foundational properties. We want them to be in good suburbs. So there's always gonna be that demand. If we need to sell that property in the future or because will be renting that property, we want that high rental demand there. We want the rent to go up over time as well. So that's why we're going to be looking at buying into high quality areas and how you can find those areas. Yeah, so there's a number of rules that ways investors can follow based on looking at the history or the data. Now just alert. I'm going to be like going hard into data on this. Sorry Ron. But you know, these rules have really simple and they make logical sense. I think. Let's just set me up when we're looking for high quality areas, what we're going to do is create a framework and we're going to set a bunch of rules in place that are basically going to exclude a lot of areas. So it's less about finding the one hotspot that you read in a magazine article or something like that. And it's about excluding all the areas that don't fit into your criteria. So this is what we've found as the easiest and the best way to do it. And we think you'll have success as well. So ben is the data node here, so he's going to lay out some of these rules for you guys that you can follow if you want to reduce your risk and increase your chance. Chance, pretend. Yeah, as always, like epic way to say what I was trying to say. So these Rosa simple. It's buying in metro markets which effectively means the big cities in Australia. If you look at the longterm data over the last 20 years, these big cities have outperformed the regional markets by about almost 80 percent. And that is absolutely insane when you think about it, leaving 80 percent on the table over 20 years. If you're not buying the biggest cities in Australia, like the CDs, Melbourne's, Brisbane's. The next best option is probably your big regional market surrounding them that will. And Gong was the Newcastle's, the sunny coast, the gold coast type things. The next thing is once you've gotten to that level, we know that houses completely outperformed units. Again, history shows us that houses do about one percent better over time than units. So what we're trying to do is present better per year, per year, so you know, which one percent might not sound like a lot, but it's a huge amount of easy money to leave on the table over time. And especially when we're talking about we're investing in these properties for longterm 10 years, 15 years, 20 years, 30 years. That one percent really starts to add up year on year massively. So if we buy the good quality markets, we buy houses in those markets and then the next thing we look for is buying is close to the city as we can possibly afford. They're the three biggest things that impacted longterm growth. Because you looked at data, didn't you? That showed that property is closer to the city, tend to perform better than properties in the outer rings of the city. Yeah. So Michael Matosich, who's an analyst in the market for the last 30 years, did some research on this and he found that properties within 20 ks of the city versus properties that are further than 30 ks from the city. So can you seem to have performed in the last 10 years in Brisbane, Sydney, and Melbourne by about one to one and a half percent better per annum. So if you're doing four percent better from buying a metro area, you know one percent better from a house and one percent better by buying close to the city, that's a lot of gains over time and you're missing out on. Yeah. So that's going to both increase your return. So if you do get in a good area, you buy the right time in the market. When that area goes up in value, you're going to get more returns for your money and as well if you end up in a bad cycle or if you buy at the wrong time and the area goes backwards. If you're following these rules, you've got less chance of going backwards as extremely so you might have less of a reduction than in another area. So you're increasing your security on the downside and you're also increasing your chances and maximum return on the upside by following these simple rules. Now that's just a couple there. That automatically cancels out a lot of Australia. You can still make money in country towns and in regional markets you can obviously still do that, but it just becomes more complicated, more specialized, and that's not really our area of expertise. So if you do want to go ahead and do that, then more power to you. There's opportunities out there, but this is just ways to reduce your risk and maximize the chance of return without becoming a full specialist to a particular country. Markets or mining towns. Yeah, whatever it may be. Yeah, and I think as investors, you know, if you're getting started on your first investment property now you might buy wine, you might buy five, you might go crazy and buy 10 properties over your lifetime, but the reality is we only have a limited amount of money. We only have a limited amount of time and savings, so we're trying to give you the things that are going to save you the most time. Instead of having to go out there and buy five crappy properties like I did, you can just go out and buy one really good one following the rules that have seemed to have worked in the history and the reason as well that we're not hotspotting, that we're actually looking for these quality and longterm suburbs is the fact that we're looking to purchase it for our foundational properties and we're going to be holding these properties for years in the future. So something that might be a hotspot in a mining town that's going to have great excessive, massive growth over the next three years might not be able to rent in 20 years time because that mining town is now dead. So that's why we're kind of avoiding those areas and looking at the high quality long term markets. We want that long term growth and if you remember from the last video, we're not just relying on capital growth either, so we don't need excessive amounts of capital growth by buying in the exact right suburb. Because we can make money with cashflow. We can make money with manufacturing growth and ultimately it's the cash flow that's going to make us financially free so we don't necessarily need huge amounts of capital growth, but we want as much as possible because why wouldn't you? I mean this is the coolest thing. When I started to look at the numbers I went, if I just get a four point eight percent increase in the value of my property per year for 15 years, every dollar that I've having a property today double. So if I've got a million dollars in 15 years time with that growth rate, it's two mil 15 years after that, if I can get the same rate again, it's 4 million bucks. So we're not talking about breaking world records here. Even if the whole marketplace was the job in a couple of years and in another couple of years to go off its head, that's kind of irrelevant. It's just the longterm averages that were more aiming for. Yup. And so now getting more nitty gritty where you want to start when selecting your market. Firstly, you're going gonna have to look at price range. That's obvious based on how much you can borrow, what can you afford, because let's say you only have $400,000 or $500,000 when we can you buy a house in Sydney cbd for $400,000. No you can't. So that might adjust where you're going to buy it, but the next step is then to look at the htw month in review report. So this is a free report put out by Herron, todd white and they basically show a property clock and they show where each market is at in the property cycle at the moment. So 12:00 is Pika market, 3:00 is declining market, 6:00 at the bottom and then 9:00 is a rising market so if you want to invest in somewhere but it's at the peak of market or selling to the client,